Business economists endorse Federal Reserve policies

One third say rates have been kept too low

WASHINGTON » Nearly twothirds of U.S. business economists say the Federal Reserve’s interest rate policy is “about right,” a sharp contrast to President Donald Trump’s attacks on the Fed for not cutting rates more aggressively.

A survey by the National Association for Business Economics found that just 4% of economists consider the Fed’s policies to be “too restrictive” — that is, that its benchmark short-term rate should be lower. Trump has repeatedly tweeted that the Fed should cut rates to zero or even into negative territory.

One-third say short-term rates are “too stimulative” meaning they feel that rates are too low.

Last year at this time, the NABE noted, three-quarters of business economists thought the Fed was on the right track even though its benchmark rate was higher. Beginning last summer, the Fed cut its key rate three times in 2019, reducing it to a range of 1.5% to 1.75%, very low by historic standards.

The economists’ views contrast with Trump, who has accused the Fed of weakening the U.S. economy and has referred to Fed officials as “boneheads.”

The NABE’s survey showed that business economists think a recession this year is highly unlikely. Just 13% of respondents forecast a downturn in 2020, down from 42% in last year’s survey.

Still, 37% foresee a recession in 2021, with the same percentage saying that one will occur sometime after 2021. The survey didn’t ask about or mention China’s viral outbreak.

The results reflect the views of 210 economists from companies, trade associations and academia. The survey was conducted from Jan. 23 through Feb. 5.

Minutes from the Fed’s January policy meeting, which were released last week, showed that officials want to keep the benchmark interest rate at a range of 1.5% to 1.75% for the foreseeable future. Rates at that level would help the U.S. economy withstand threats from slower growth overseas, policymakers said, and help lift annual inflation back to the Fed’s 2% objective.