76% say it shouldNew research from Wallethub.com, the personal financial website, identifies emerging attitudes about monetary policy. Reprinted with permission. Visit here.
June 17, 2019 — With the Federal Reserve expected to contemplate a rate cut on Wednesday and markets indicating there is a 97% chance of a drop in rates by the Fed’s September meeting, WalletHub has released the results of a brand-new Fed Rate Survey gauging consumer sentiment on the matter.
Highlights from the nationally representative survey can be found below, along with commentary from WalletHub CEO Odysseas Papadimitriou.
There is a 23% chance the Fed will reduce its target interest rate on June 19. There is an 87% chance of a rate cut by July 31, and the odds rise to 97% by September 18.
Recent Rake Hikes:
The Federal Reserve has increased its target rate nine times since December 2015, with no decreases.
76% of people support a Fed rate cut, and around the same percentage think it would be good for the economy.
Credit Card Savings:
76% of Americans say their credit card interest rates are too high. Credit card users would save roughly $1.6 billion in interest if the Fed cuts its target rate. The average household currently owes $8,390.
Trump vs. the Fed:
7 in 10 people say the Federal Reserve knows how to grow the economy better than President Trump.
Q&A with WalletHub CEO Odysseas Papadimitriou
Will the Federal Reserve cut its target rate?
“The Fed probably won’t cut its target rate at its June meeting. But future pricing indicates we’re almost certain to see a rate reduction this summer or early fall.”
Should the Federal Reserve reduce its target rate?
“The Fed has more economic data than anyone, so if they are simply reacting to market conditions, there’s no reason to question them at this point. However, the Fed must make it very clear that the move is not politically motivated.”
Is the Fed planning a rate cut because of President Trump?
“President Trump’s public statements have made it abundantly clear that he wants interest rates to go down, not up, because he wants to prolong the economic expansion through reelection. However, Fed Chair Jerome Powell has also made it clear that he fully understands the independent authority of his office. It is hard to say which of those two opposing forces is winning out right now.”
Who will a Fed rate cut help the most?
“A Fed rate cut would be great for people with credit card debt, who WalletHub projects will save roughly $1.6 billion on interest. If reducing rates delays the next recession, it would help all of us by giving us some extra time to save up for leaner times. Plus, a drop in rates would put American businesses and consumers in a better position to withstand an escalation in the trade war with China.”
Why did the Fed raise rates in September and December 2018 if they’re just going to reduce them now?
“The Fed’s official position will be that market conditions have changed. The story you’ll see on cable TV will be that President Trump coerced the Fed into action. From my perspective, the Fed completely miscalculated how serious the Trump administration was about using tariffs as a negotiating tool with China and other countries.”
Details from the Wallethub.com Def-Rate Survey
Should the Federal Reserve drop interest rates this month?
Do you think your current interest rates on your loans are too high?
No20%They’re just right14%Yes66%
Do you think that a drop in your credit card interest rate will be good for the economy?
Do you think your credit card APR is too high currently?
It’s just right9%No15%Yes76%
Is it good for the economy when the Federal Reserve drops interest rates?
I Don’t Know22%No20%Yes58%
Is it good for your wallet when the Federal Reserve drops interest rates?
I Don’t Know12%No20%Yes68%
Who best knows how to grow the American economy?
President Trump33%The Federal Reserve67%
If the Federal Reserve drops interest rates, how confident will you be in the economy?
Less confident10%More confident49%Same amount of confidence41%
When the Federal Reserve drops interest rates, which of the following become less expensive:
Car Insurance2%Car Loan8%Cell Phone Bill4%Credit Card30%Electric Bill2%Home Insurance4%Mortgage46%Savings Account4%
Do you agree with President Trump that it’s time for the Federal Reserve to drop interest rates?