Lower Interest Rates ‘Are Justified,’ White House Says

The White House, breaking with its usual no-comment stance on activities of the Federal Reserve Board, said today that “lower interest rates are justified.”

Presidential spokesman Marlin Fitzwater said recent economic reports show that the economy could benefit from an easier monetary policy.

“We had a recent drop in the prime (rate). That hasn’t been totally passed through. But we nevertheless remain hopeful that it will be,” Fitzwater told reporters.

Major banks lowered the prime interest rate Jan. 8 to 10%, down from 10.5%. The independent Federal Reserve, however, has not lowered its bellwether 7% discount rate, the rate it charges other banks, for nearly a year.

Asked whether sending a message to the central bank from the White House briefing room ran counter to the Administration’s general policy of not commenting on matters before the Fed, Fitzwater said:

“This is not a new message. But it’s important occasionally to point out that lower interest rates are normally good for the economy.”