Nearly Half of Investors Oppose Latest Interest Rate Cut

This week’s special question asked AAII members what they thought about the Federal Open Market Committee’s decision to lower rates for the third time this year. About 45% of respondents view the cut as a bad decision. While the rationale of this group varies, a lack of “ammunition” in a future economic downturn is named most frequently. On the other hand, 26% of respondents say that the latest rate cut was the right decision given the current global economy. Outside of these groups, 15% of respondents say they believe the Fed’s decision was politically motivated and 14% state that they are unsure how the decision will impact the economy going forward.

Here is a sampling of the responses: 

• “Disappointed. Our economy is in fairly good shape, so I think the Fed should have waited until the outlook looked weak.”
• “Good for the economy, but not good for us retirees who depend on interest earned income.”
• “I don’t know if it was needed or not. I can see arguments for both sides. The bottom line is, I don’t think the Fed is any better at predicting the future as anyone else.”
• “I’m not impressed as the rates were already very low. It gives them limited room to maneuver when we get into another recession, which is inevitable at some point.”
• “To keep the economy in high gear I think it was a good decision. Jobs are being added to the workplace, unemployment is low and the Dow is up. It should be a good Christmas.”

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