Should the Fed cut interest rates?

Federal Reserve Board Chairman Ben Bernanke poses in the board room of Federal Reserve headquarters Friday, Jan 26, 2007, in Washington. Bernanke and his colleagues gather Tuesday, Jan. 30, 2007, for a two-day meeting to discuss what is needed to keep the economy on track and improve the central bank's communications with Wall Street and Main Street. (AP Photo/Manuel Balce Ceneta)
Manuel Balce Ceneta
Federal Reserve Board Chairman Ben Bernanke poses in the board room of Federal Reserve headquarters Friday, Jan 26, 2007, in Washington. Bernanke and his colleagues gather Tuesday, Jan. 30, 2007, for a two-day meeting to discuss what is needed to keep the economy on track and improve the central bank's communications with Wall Street and Main Street. (AP Photo/Manuel Balce Ceneta)

"Yes, I think the Fed should cut rates. I think the Fed should have more control of the housing market. The people who think this problem will go away are wrong. We need to fix this problem before this problem gets out of control. “ Jonathan, Alabama

“A rate cut would help but so would property tax relief. In my neighborhood property values have doubled over the past 10 years but property taxes have quadrupled. What do you do when your mortgage payment keeps going up?” --Claire D., Georgia

No. The Fed should increase interest rates. The spread is already too big and lending practices are too lax. We have massive trade and budget deficits and need to defend the dollar, If the Fed cuts interest rates it would fuel inflation and cause imports like oil to rise even further and all imports would cost more….There’s too much cheap money, cheaper money will make things far worse." Smitty, California

Yes. Let's start heading off this latest problem early! Why wait until the foreclosure rate increases to a point unmanageable. It's obvious to the most casual observer what's on the horizon.” -- J. Wesley, Texas

“Absolutely not. The Fed should not micro-manage the economy and should definitely not try to manage the stock market or the real estate market. Fed funds are neutral after years of free money. Wake up America. The free money gravy train is over. -- Lloyd W., Georgia

"It is irrelevant whether the Fed cuts rates. Look at the example of Japan in the last decade. Their central bank cut rates to ZERO and it was not enough to stimulate a significant recovery. There is too much debt out there, and too little risk premium in a large variety of risky investments. We are living in a house of cards that will collapse before things will get back to anything resembling 'normal.' The only question in my mind is how many institutions we have come to trust will fail before this slow motion collapse comes to an end." -- Rich G., Illinois

"The Federal Reserve has crushed consumer confidence over the 17 raises. No small and medium size business can withstand such hikes. The cost for a loan, more than doubled. And inflation is not the key. The federal reserve has lost their marbles. The 12 board members do not have any understanding of what makes our country great. Just looking over statistics that are sometimes more than 9 months old, as in the case of homebuilding and mortgages, is stupid and ridiculous. I have written numerous letters to the FED. In Atlanta and Washington. The only way to keep the economy from falling hard is to reduce rates. We are at a national crisis. With the war in Iraq, as well as the 17 raise, consumers get the idea that government does not care about business. The housing industry has been abandoned. And it is the only industry that needs confidence from a consumer to buy a very big ticket item, a home, the America dream. With local government regulations increasing, we did not expect the federal reserve to the enemy of business. By fighting inflation, they have lost the goal of keeping the people happy in this country. We do not need a 9/11 emergency for the fed to lower rates and keep it low. The real emergency is for consumers not to buy homes that house all the other purchases. Lower the rates. We already in trouble." -- Itchko Ezratti

"Absolutely not! Lowering rate would set up economy for hyperinflation along with abandonment of foreign investment keeping our debt funded. The horse has left the barn and it is too late to compensate." -- Travis E., California

"Only if the Fed wants inflation that will be a repeat of the late '70s era." --
Randy J., California

"Yes, absolutely, the sub-prime woes today should be the loudest indicator, along with the deliquencies. The mid level incomes in America can no longer afford homes, and the lower income have been taken advantage of by the lending industry with the sub-prime product, through over-selling the American dream. The fed chairman needs to get responsible to middle america on his decision making." -- Kristie K., Illinois

"I agree with the Countrywide CEO. The market always overdoes things but if government policy is to increase homeownership among poorer people then the Fed must lower interest rates. People are being hurt by high interest rates on credit card balances which reduces the amount left for mortgage/rent payments. If the Fed will reduce rates that would help ease that problem." -- Ed., Arizona

"NO! Too low interest rates is what got us into this problem. We need a Fed chairman who isn't so interested in creating bubbles to avoid a cleansing slowdown (easy Al Greenspan) or who will not turn a blind eye to inflation (Bernanke). They are more interested in being popular with Wall Street than with doing their job. I wonder if they even know what their job is and how much of a kickback they're getting from Wall Street." -- Bob G., Texas

"Why?? To bail out the people who are making bad loans (but still making themselves a lot of money), or to bail out the people who have taken out bad loans, to speculate on the housing market (bubble), or to bail out a stock market that is still above 12,000. No, if the Fed were to ease, the dollar would go into a mini free fall. Now that would be a problem." -- Aiko A., Colorado

"A Fed cut may help the housing slump but will not fix the problem with financial institutions. The Fed should tighten loan standards for banks if they can." -- Steven D., New Jersey

"No. This will bring back the artificial wealth effect from over inflated housing prices (i.e. ATM machines). We can’t let people with bad credit and the masses in general to use their houses to buy Hummers and BMW’s that should only be bought by the truly wealthy. If they can, then we will have inflation. And we all know how the Fed deals with that – they raise interest rates. Worse yet, we know how the market and economy will respond to that. Let the sub meltdown run its course and shake out the weak hands, but don’t broil the markets and economy by cutting rates." -- Jonathan M.

"Yes, I think it's about time for the fed to move-in and cut the rate. It'll help the housing market as well as the problem with sub-prime lendings." -- Gil, Illinois

"No. The Feds interfere too much, raising and lowering every other month. Leave it alone. It's sort of like the time change, we were to set our clocks ahead to save energy ... OK, if it saves energy why not leave it on daylight saving all the time?? They do in Arizona!" -- Fredric F., California

"The fed should stay still right through 2007. The subprime woes represent only a small percentage of the economy and their impact has been way overblown. Let us remember that the housing market is starting to turn, as, according to Toll Brothers, inventories will be worked off within a few months. With the current tight labour market and low interest rates, I tend to agree eith Mr. Bob Toll. The fed should do NOTHING!" -- Evan., Ontario, Canada

"I am a real estate agent who believes the Fed needs to wake up and lower rates asap. With a real estate and automobile crisis at hand, the Feds need to make a substantial rate cut to jump start the economy before everyone is financially affected." -- Sandra E.

"I personally don’t think the Fed should cut interest rates. It seems that the lenders got themselves into this mess by overextending themselves with loose lending standards and now they are looking for the Fed to bail them out. Who is to say that this won’t become a vicious cycle over and over as the Fed cuts and raises rates." -- Shawn S., New Jersey

"No, the Fed should RAISE interest rates. Inflation is running too hot -- just look at gas, housing, rental and food prices." Doug, California

"Yes, The effects of the sub prime crisis are just starting to be felt. When we see the effects of the institutionally owned derivatives it will be too late to cut rates. -- Gordon A. Oregon

A quarter point would offer some help to homeowners and troubled lenders facing mortgage resets. They both need some help right now. -- Michael F., California

Yes. Housing and retail are lagging. I feel they raised too much to begin with.” -- Eric Y., California

No. There is enough liquidity in the market.” -- Simone B., New York

Not yet. Inflation is a larger problem potentially, over that of the housing sector or the market decline. I am heavily invested in the capital markets, and have lost money, but I don’t think the Fed should bail it out unless the housing sector really tanks. -- Mark L., North Carolina

"Based on current indicators one would think it's a good time for a rate cut. However, the current mortgage mess indicates lower rates do have a downside." -- Ellis W., Florida

“The long term outlook seems to indicate that they are wrong and we are heading down and will not have a soft landing. There is a need to lower rates now to avoid additional problems from the housing market slump…." -- Peter M.

"Absolutely. The Fed doesn't seem to know what is happening on Main Street. Folks are stretched way to the limit. Gas price hikes, low wage increases and property tax increases have left the consumer in a net negative position." -- Joan M., New York