Fed: An Emergency Rate Cut

By Douglas A. McIntyre Published Mar 10, 10:23AM EDT

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The Fed may cut rates between now and its scheduled meeting on March 18, according to Goldman Sachs.

The firm said it had previously expected the cuts to come later. Reuters reports "Goldman said the Fed would drop the benchmark federal funds target rate to 2 percent by late April, most likely in two 50 basis-point steps at the next two meetings."

An emergency cut now would be an excellent idea. The prices of oil and agricultural commodities are going up regardless of US interest rates. They are now part of a global demand cycle which operates, to some extent, separate from the US market.

With oil-based products and gasoline taking more of the consumer dollar, a relief on the credit side would be more than welcome. The problem the Fed has is that most banks are not passing lower rates on to businesses and consumers.

Unless the Fed adopts a position that it expends lenders to take some of the benefit of lower rates and move them to customers repeated cutting may benefit the balance sheets at embattled banks. What it does for the balance of the economy is unclear.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.