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Too Little, Too Late?

Only time will tell whether the Fed's interest rate cuts will help entrepreneurs.

This story appears in the April 2001 issue of Entrepreneur. Subscribe »

The economic slowdown and rumors about a recession in the offing for 2001 is causing small-business advocates to voice frustration over the Federal Reserve's delay in lowering interest rates. When the flow of money slows to a trickle in the public markets and traditional borrowing rates remain high, entrepreneurs get hit first and, arguably, hardest.

The economy depends on entrepreneurial growth, so the Fed should have ample incentive to cut rates and make other pro-small-business policy changes. So says the Small Business Survival Committee, a nonprofit, non-partisan small-business advocacy group. In its latest report, SBSC chief economist Raymond Keating praises Congress' 1997 capital gains tax cut and the incentive it provided for investment in entrepreneurial ventures, but also criticizes the tightening of monetary policy in late 1999 and early 2000, calling those rate hikes "grossly misguided policy measures."

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