Economy teetering on edge of recession as rates fall, analysts warn

With the falling interest rates in the US, the bankare coming up with new policies which could aid American prosperity as well as dive the economy in a heavy recession, as per a few financial analysts.

In the month of July, the Federal Reserve cut down its rate, to a scale of 2% to 2.25%, a major drop since the Great Recession. Now, with the support of President Donald Trump, Jerome Powell, the Chairman of Federal Reserve appears to be quite prepared to lower the rates even further this week.

According to Greg McBride from, the dropping interest rates will squeeze the interest margins undoubtedly. This would reflect concerns among the other financial analysts that the banks might begin restricting lending and accelerate a recession.

Previous week, Trump in a Twitter post referred Fed as ‘boneheads’ and asked to drop rates to 0 or below. However, analysts instead issued a warning.

Another reduction in US interest rates, combined with extremely low or negative rates in some cases in Europe would severely impact the nation’s banks, Mayra Rodriguez Valladares from MRV Associates said. The banks would soon have several mortgage borrowers at their doorstep who will wish to refinance on mortgages with lower rate, Valladares added.

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