Are interest rates usually lowered when Republicans are in office?

Interest rates under Reagan were sky high.

^^Interesting. I tried to find a graph with the information in a simple format, but it didn’t pop up so I asked the Q.

I hadn’t remembered that interest rates were very high under Reagan. I always think about the deficit growing under him, but never thought about the interest rates. I’ll look it up.

I remember very high interest in the 70’s.

Um, that was Carter who had us in sky high interest rates back in 79–81

The fed funds rate reached a high of 20% in 1980 to combat double-digit inflation.

Inflation began to skyrocket beginning in March 1973 when President Richard Nixon disengaged the dollar from the gold standard. Inflation increased from 4.7% to 12.3% in December 1974.4 The Fed increased the fed funds rate from 7% in March to 11% by August.

Inflation continued to remain in the double digits through April 1975. The Fed increased the benchmark rate to 16% in March 1975, worsening the 1973 to 1975 recession.5 It then reversed course, dramatically lowering the rate to 5.25% by April 1975.

These sudden changes were part of a “stop-go” monetary policy. They weren’t sustained enough to either end inflation or spur growth. Confused businesses kept prices high to stay ahead of the Fed’s interest rate spikes, and this only made inflation worse. Fed leaders learned that managing inflation expectations was a critical factor in controlling inflation itself.

Federal Reserve chair Paul Volcker ended the Fed’s stop-go policy in 1979. He instead raised rates and kept them there to finally end inflation. That created the 1980 recession, but it thoroughly ended double-digit inflation, which hasn’t been a threat since.

If you are annoyed by low interest rates then never fear. Interest rates will be going up soon.

@Caravanfan I’m annoyed by the extremely low interest rates, and the way politicians and their friends capitalize on the way up and the way down, both for power and money while others get very hurt. It’s not that I’m against capitalism, but I think that it’s manipulated and people in the know make out like bandits and others get very hurt. In fact, it helps divide the country psychologically also, it’s not just money.

I don’t like such steep ups and downs.

Everything in the world does not revolve around a Red vs Blue scenario. I don’t know why people propagate this thought by trying to tie everything to this concept. There are so many more variables.

interest rates go up to reign in inflation. Inflation was bad during Carter so interest rates were raised under Carter but when Reagan took over he benefitted from higher interest rates because inflation got better. This is a Chart or inflation meets higher interest rates. I’m no financial whiz but I believe it brings down inflation because people are less willing to go on shopping sprees when interest rates are higher. Especially for homes.

So they want to wait out the market till interest rates go down. So home values go down to entice buying. I assume it works for more than just homes. People not wanting to pay more on the interest rates on their credit will put less on credit and may forget about replacing their nice tv for a nicer one that will cost them more in the long run because of higher interest rates. The idea is to force prices down by decreasing spending. I know the homes in my area are way, way above what they should be. I couldn’t sell my house anytime soon because even selling my home above price, I couldn’t afford any homes close to mine at the same price.
Nor for the low fixed interest rates I paid for.

@Pandora. inflation got bad under Nixon and Ford. Remember Gerald Ford and his buttons for WIN – “Whip Inflation Now”?

Slogans don’t affect the economy.

@zinvelo I was a young teen then. If it were not for watergate, I wouldn’t even remember what Nixon looked like back then, much less Ford’s slogan. But I did remember inflation was an issue back then and I remember Carter better. I find it amusing that people act as if Inflation is a new thing. It has been around for years and is expected to happen off the heals of a pandemic and a war that is destabilizing the global market. This is not something that is magically wiped away with some magical wand.