![Should the Fed increase the interest rates? No! [Image Credit: U.S. Government/Wikimedia Commons]](https://staticr1.blastingcdn.com/media/photogallery/2017/10/15/660x290/b_502x220x82/should-the-fed-increase-the-interest-rates-no-image-credit-us-governmentwikimedia-commons_1633131.jpg "Should the Fed increase the interest rates? No! [Image Credit: U.S. Government/Wikimedia Commons]")
The Federal Reserve has been increasing the Interest Rates lately, but I think that it should stop doing so. The interest rates can be increased or decreased depending on the moment that the American economy is living. According to a report by The New York Times, a low-interest rate can increase the levels of consumption and accelerate the economic growth of the nation, but it can also increase the level of inflation. If the prices keep going up, the interest rates will be increased, so, the consumption levels will grow more moderately and the inflation rate will fall.
High-interest rates will make the economic growth slower. There must be a delicate balance when dealing with the interest rates, a terrible mismanagement could be devastating for the local economy. I have some reasons to believe that the Fed has to stop increasing the interest rates, I will explain them:
The trade deficit with China
According to a report by The Street, the Chinese trade surplus with the United States increased to more than $28 billion last month. The Trump administration has been complaining a long time about the huge US trade deficit with the Asian country. China has many advantages over America when competing in international markets, but the main ones are two: A cheaper labor force, and an undervalued currency.
The US labor costs are much more expensive, so, China has a huge advantage here, but America can make its dollar cheaper. How? By cutting the interest rates. The Chinese currency is undervalued considerably, so, the US has to weaken its national currency too.
Unemployment
The level of unemployment in America has fallen in the last years, but I also believe that many people are underemployed, so, the American labor market has to be revitalized.
The Fed must maintain the same interest rates or even cut them a little bit. It must have an aggressive policy that fosters economic growth and the creation of jobs. Even if the inflation rate increases a bit, it's no problem because the inflation rate is at low levels according to a report by Trading Economics. The inflation rate is just 2.2 percent.
Economic growth
The best way to find a solution to all problems is by creating wealth, and a simple way to increase the size of the gross domestic product is reducing the interest rate. This will foster growth, the United States has to grow faster if it wants to recover its lost glory. Social policies can sound great, but if there is no economic growth there will be no future. We can't share what we don't have, so, this is the moment to maintain the same interest rates or even reduce them. Just radical measures will revitalize America.
