In this video, we're going to take a look at why the Federal Reserve cut interest rates

even though the U.S. economy is performing well.

The Federal Reserve recently announced that it's cutting interest rates, the first time

it's done so since 2008.

Rate cuts generally coincide with some sort of economic weakness, which makes the Fed's

recent decision a bit uncommon.

The last time the Fed began a rate cut cycle was during the Great Recession.

At the time, unemployment had started to tick upwards and there were some major signs that

the economy was beginning to fall apart.

For example, housing prices had fallen significantly by the time the Fed made its first move.

But the Fed's recent rate cut comes at a time when the U.S. GDP growth is strong and the

stock market is at all-time highs.

Additionally, the unemployment rate in the U.S. is sitting at just 3.7% right now,

which is extremely low in historical context.

So, why did the Federal Reserve cut interest rates this time?

To understand why a rate cut makes sense this time around, it's important to realize that

the Fed has a dual mandate.

The first is to maximize employment and the second is to maintain inflation at a desirable level.

With the unemployment rate at about 3.7% right now, employment is maximized already.

However, inflation has been extremely low, well below the Fed's 2% target rate,

which means that there's a solid case to be made that it's in the economy's best interest to

help sustain the current expansion by cutting rates.

Additionally, global economic growth has started to slow, and the ongoing trade war between

the U.S. and China is prompting an elevated level of caution among policymakers.

Some experts think that the Fed might make several rate cuts in order for it to reach

its inflation goal.

The bottom line is that the U.S. economy is solid, but the global economy isn't quite

as strong as the Fed would like to see.

Cutting interest rates should help inflation start to take upward and allow the U.S. economy

to continue growing. Thanks for watching this video!

Do you think the Federal Reserve made the right move by cutting interest rates?

Let us know in the comments section below.

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