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Sunday, July 05, 2009

Federal Reserve Keeps Interest Rates Low... No Worries About Inflation

I'm really sick of looking at this really old post about the Federal Reserve and interest rates so I'm posting an update!  At the end of June, the Federal Reserve met and decided to keep the federal funds rate the same at 0 - 0.25%.  The federal funds rate is the rate banks charge each other.  This was really no big surprise, as most economists expected the Fed to leave the rate alone.  It hasn't changed since December 2008 and isn't likely to increase anytime soon.  The Fed says that the pace of economic contraction is slowing and there's evidence of household spending stabilizing, but inflation does not seem to be a worry to the Fed right now.

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

Posted by BlogArizona BlogMaster on July 5, 2009 | Permalink

Comments

Deflation is still the problem. Credit tightening is not going to let inflation come in. Also, some of the biggest money funds are inflation hedges. When Many people believe that something is the worry, they are usually wrong.

Posted by: richard stabile bergen county real estate | Jul 11, 2009 2:00:53 PM

I agree that deflation is the most immediate concern since so many companies are having to drop prices to compete in the bad economy. But in the long term, I don't see how you avoid a problem with inflation. We just printed over $1 TRILLION in March 2009. Printing all that money will eventually result in inflation.

Posted by: Dave H | Jul 15, 2009 3:31:13 PM

I agree that in the long term, inflation will increase because of all the money the gov't just printed, and who knows how much more the Obama regime will print. Also, in the long term it's in the US Govt's best interest to have high inflation because it will lower the value/impact of our national debt.

Posted by: Shannon Hubbard | Jul 15, 2009 9:12:19 PM

Higher unemeployment is not going to be inflationary for a while. Inflation will begin when the economy starts to pick up steam. In spite of what the media says, that is not in sight yet.

Posted by: Alexandria Homes for Sale - Ellen Crawford | Jul 30, 2009 1:56:51 PM

Apparently the Federal Reserve recently announced that they're slowing down the lowering of rates and assistance to homeowners, so we should jump into the market soon.

http://www.nytimes.com/aponline/2009/10/08/business/AP-US-Mortgage-Rates.html?_r=1&scp=3&sq=mortgage%20rates&st=cse

Posted by: Finance3 | Oct 14, 2009 12:52:02 PM

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