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Tuesday, August 05, 2008

Federal Reserve Leaves Interest Rates Alone

Earlier today, the Federal Reserve decided to keep its main interest rate the same.  The federal funds rate, which is the rate banks charge each other, will remain at 2.0%.  This was really no big surprise, as most economists expected the Fed to leave rates alone during today's meeting.  In fact, even despite fears of inflation, many believe the federal funds rate will remain unchanged for the remainder of the year.  Keep in mind that the federal funds rate does not immediately affect long term mortgage rates, but the Fed's decisions can affect consumer confidence in the real estate market right away.  Wall Street investors sure loved today's news, and the stock markets went crazy!

Although inflation is becoming a very real worry, the Fed obviously thinks the fear of economic slow down is greater.  I tend to agree (not that any economists care what I think!).  But the housing and mortgage markets really need to improve before the Fed starts raising interest rates again.  Higher rates could really hurt an already slow real estate market.

Written By: Shannon Hubbard Realtor®-Investor Great American Realty, Inc. Cell: (480) 695-6672 Email me

Posted by Shannon Hubbard, Arizona Real Estate Agent on August 5, 2008 | Permalink | Comments (27) | TrackBack