Federal Reserve
View PDF | Print View
by: marciafreeman
Total views: 84
Word Count: 367
The recent announcement of the federal reserve that it was planning to reduce interest rates from 1.5 percent to 1 percent inspired hopes that the economy of the United States would greatly benefit from the resulting increase in consumer spending, as well as the general confidence in the economy that was likely to follow. The Fed has stated that along with other measures, this lowering of interest rates will help improve the current credit climate in the country and spur on a new period of economic growth.
While many financial analysts anticipated this move by the Fed, it was unclear how large the interest rate cuts would be. The federal funds rate was already lowered several times over the past year, with a half point decrease implemented only a few weeks ago. This most recent lowering of the interest rate puts it at the same level as it was in late 2003 and early 2004. This stands in sharp contrast to interest rates in the latter part of 2006 and the beginning of 2007, when rates reached as much as 5.25 percent.
Needless to say, borrowers throughout the United States have received news of the lowering of interest rates with much anticipation. Take note however, that the Fed does not actually set the level of interest rates for debts such as mortgages, car loans, and credit cards. Nevertheless, its actions do have an effect on how interest rates fluctuate. The rates paid on mortgages for example, are dependent on Fed bank rates, and they are in a particularly advantageous position when the Fed lowers their rates. What all this means is that people that apply for home equity credit, credit cards, and adjustable rate mortgages or ARMs stand to greatly benefit from these recent interest rate reductions.
On the downside, lowering of interest rates could result in interest rates remaining low on savings and checking accounts, as well as certificates of deposit. Therefore, it is imperative that consumers compare the rates offered by different banks with regard to these accounts. Related Links Home loan rates - Refinance rates - Refinance - Home mortgage -
About the Author
Find more info about mortgage loans, stop by www.getsmart.com/refinance.
Rating: Not yet rated