Understanding the Fed’s rate cuts: ASU professor provides insights

Will lower rates impact economic growth? A W. P. Carey finance expert weighs in.

In this article published Nov. 20, 2025, on AZ Big Media:

In one way it's bad, and in another way it's good.

The Fed lowered the rate because it sees increasing economic risks. It is particularly concerned that employment and real economic growth could fall in the future. Currently, the unemployment rate is holding steady — an important indicator. At the same time, more people are leaving the labor force; these individuals are not employed but also not counted as unemployed because they aren’t looking for work. Consistent with that, employment growth rate is slowing. These deteriorating current conditions — and what they signal for the future — contributed to the Fed’s decision. So, in one way, the rate cut is bad.

At the same time, the Fed cuts rates proactively. It's like seeing someone take medicine: It's not good that they'd need it, but the medicine will help. Lower interest rates encourage economic activity now by making it cheaper to borrow, which stimulates spending and business investment, all else equal. The Fed's goal is to boost the economy through its decision. So, in another way, the rate cut is good.

— Seth Pruitt, associate professor of finance