Fed to Raise Rates for 1st Time in 4 Years

[redqueen]

http://story.news.yahoo.com/news?tmpl=story&ncid=&e=2&u=/ap/20040630/ap_on_bi_ge/fed_interest_rates_8

WASHINGTON - Now that the economic recovery is on solid ground and the jobs climate is improving, Federal Reserve (news - web sites) policy-makers are ready to boost interest rates for the first time in four years.

Ultra-low rates are no longer needed to support the economy and inflation is coming out of hibernation, reasons enough for the Fed to embark on a credit-tightening campaign that is expected to stretch well into 2005.

Fed Chairman Alan Greenspan (news - web sites) and his colleagues have sent numerous signals to Wall Street and Main Street, especially since their last meeting on May 4, that short-term rates are going up. In anticipation of that, some long-term rates, such as those on mortgages, already have moved higher.

For a year, the Fed's primary tool to influence economic activity — the federal funds rate — has been at 1 percent, a 46-year low. Economists widely expect that Fed policy-makers, at the end of a two-day meeting on Wednesday afternoon, will decide to boost the funds rate by one-quarter percentage point.

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Anyone know when the actual announcement is due?

[physioex]

1. I think it's only time...

And this is only necessary. It's not possible to keep short term interest rates that this low level perpetually...

[Cicero]

2. Agreed...

...besides, its not like the rate could go much lower, anyway. A quarter point increase is extremely mild.

Later,

[Yavin4]

3. This Is The Beginning of The End

He'll have to keep raising rates well into 2005, regardless of who's president, and that will tip off a major economic collapse.

[MercutioATC]

4. That might be a little extreme, but I agree, in part.

I believe that a good deal of this economic boost was due to the refinancing boom and the cash that people took out of their houses as a result. Higher rates = fewer refinances = less money spent = possible (probable) economic downturn. It'll be interesting to watch.

[redqueen]

6. Anyone think a burst housing bubble will follow?

Interesting times indeed.

[MercutioATC]

7. I've read the theory, but I don't think it'll be a problem in most markets

Big, expensive cities (New York, L.A., San Fran, Chicago) maybe. Most of the country should be O.K., I think.

[redqueen]

9. I sincerely hope you're right

However it concerns me thinking of how many families have re-financed and taken cash out, and how many live at the edge of their means, if not beyond.

[underpants]

5. Well Fred Barnes of the Weekly Standard this is a great sign of Bush's

economic policy and how successful they have been wouldn't you say?

Yes Britt I don't think there is any doubt that this is a clear sign and endorsement if you will of how successful and visionary President Bush's tax cuts were and frankly are.

I forgot to re-enforce that he IS the President

It's okay Britt just don't let it happen again

Mort?

Whatever Fred said I agree with

Okay I was just checking....

[redqueen]

8. It's offifical

Just got the announcement emails. quarter percent