When someone asks you whether the Federal Reserve should raise or lower interest rates, the proper answer is “No.” The Fed should do neither because the market, not a government institution, should set interest rates.
First, here’s a primer on how the interest rate targeting system works. The Fed is America’s central bank, or in reality, a system of banks. The Federal Open Market Committee, whose members the government appoints and are from member banks, sets Fed policy. The president appoints its chairman and the Senate confirms the appointment. Do the names Volcker, Greenspan, and Bernanke ring a bell? That’s because they were chairman of the FOMC. The media generally calls that person the Fed chairman. The current Fed chairman is Jerome Powell, who was appointed by President Donald Trump and reappointed by President Joe Biden. The group he chairs meets periodically, deliberates policy, and issues a statement to the general public that includes announcing an interest rate target.