Federal reserve lowers interest rate to 4.5%
Amazing. (amazingly good or bad depends on what side you're on) The Federal Reserve lowers the interest rates two consecutive times. Hmm. I wonder what they are up to. There's a thin line between fighting inflation and recession (Fed's primary job description) and spoiling the Big Wall Street firms clamoring for rate cuts. I hope they're not doing that. Because that's not their job
We often hear about rates and Feds and what not. What is the Federal Reserve anyway? what do they have to do with me?
learn more about it here: Federal Reserve System
What does it have to do with our Real Estate market? I found an article which I hope would give you a better idea on how it affects our industry, it was published on June 28,2006 by Reuters it talks about Real Estate Top Executives complaining about the rising interest rates : enough of Fed rate hikes,real estate execs say
Here is an excerpt from Bloomberg's post on today's rate changes:
'The Fed acknowledged that ``economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance.'' At the same time, ``the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction.'
here's the rest of the article: Bloomberg talks about rate cuts
I have studied stocks in depth for two years and still can't understand some of the things they say in this article. I hope they can be clearer in explaining to the people. I'm not saying to make it sound elementary but geez a little bit more clarity would sure be nice.
Here's a better article I found: Fed cuts rate to ease housing slump
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This is definitely a difficult subject to understand (I know I'm still struggling with it), but it's important to everyone. On one side of the see-saw is keeping our current economy going with enough cheap credit, but on the other side is inflation. No matter what the administration says, inflation is already starting to hurt. (Do they include gasoline and health insurance in the Consumer Price Index?)
The Fed's rate cutting helps businesses, but does it help individuals? It might keep us from losing our jobs, and it might let us borrow money at lower rates (I wouldn't count on the latter), but then we will have to deal with inflation.
Devaluation of the dollar is on the same side of the see-saw as inflation (along with increases of the prices of oil and precious metals). One blog I read keeps saying that the Fed's true responsibility is to maintain the value of the dollar, but I didn't see that in quickly skimming the Wikipedia entry you cited. I plan to go back and spend more time on that.
Another thing I keep hearing is that the rate cuts are only postponing an inevitable crash. But I've been hearing predictions of a crash since 2001.
Ann,
That's a good suggestion. INCLUDE GASOLINE AND HEALTH INSURANCE IN THE INDEX. That would shake up things.
Whenever the FED slashes rates to all-time lows(like what they did a few years ago), I think it's a blessing and a curse for us consumers. From what I observed. It could be used as a license for us to dig ourselves to acquiring more bad debts. Well, that's our fault. But yes, ultimately I tend to believe that it helps corporations more, not too mention stockholders and all her cousins.
I believe that the crash is long overdue. But who am I to say? I am a mere mortal. That's the problem when we keep hearing and reading about market crashing over and over again. People get desensitized. Exact same thing happened in the real estate market.