The Federal Reserve Bank today lowered the federal funds rate by a sizeable 75 basis points to 2.25 percent – the latest in a series of dramatic measures by the Fed to manage the severe disruptions in credit markets that now threaten the economy.
House Budget Committee Ranking Republican Paul Ryan (R-WI) said the following:
“Americans are painfully aware that prices for everything – from groceries to gas – are on the rise. And inflation expectations among investors and consumers are drifting upward.
“So while today’s additional sharp rate cuts may, as intended, work to mitigate a further weakening in the economy, they will also further stoke the risk of inflation. “Inflation is a dangerous threat to our economic wellbeing – it wipes away savings, it eats away at the paychecks of working people, and it devalues the quality of life of those living on fixed incomes.
“The primary function of our monetary system is to maintain price stability and to keep confidence in the dollar as a reliable store of value. Unfortunately, that confidence has been shaken. Even in these challenging economic times, we must avoid a rush to policies that undermine our prospects for longer-term economic growth.”
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