The federal funds rate is already lower than levels recommended by several well-known policy guidelines. Recent uncertainty does not justify further easing.

The Federal Open Market Committee is widely expected to leave its federal funds rate target unchanged at 3.5 to 3.75 percent when it meets on March 17–18. While investors eagerly await lower interest rates, the leading monetary policy rules suggest holding steady is the right approach. Despite increasingly uncertain headlines, there is nothing in the current economic data to justify further easing.

The latest Monetary Rules Report from AIER’s Sound Money Project shows that the current policy rate is already slightly below the range implied by several well-known rules. Those rules point to an appropriate federal funds rate close to 4 percent. In other words, the debate heading into this meeting should not be about whether the Fed ought to cut again. It should be about what evidence would justify another cut. At present, that evidence is lacking.

• Increasing Uncertainty
• What the Rules Say
• What Would Justify Further Cuts?
• Looking Ahead

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