The Fed: Betting on a rate hike – Orlando Real Estate
There is a growing sense that the worst of the credit crunch may be behind us. And despite a tamer-than-expected reading for April, inflation is still very much a concern for many Americans.
So with that in mind, could the Federal Reserve be forced to raise interest rates before the end of the year….even in the midst of the presidential race?
The Fed has historically been reluctant to make significant policy moves in the months leading up to the election.
The market now seems to think that Fed chair Ben Bernanke may take action just a few days before Election Day on Nov. 4.
According to futures listed on the Chicago Board of Trade, investors are currently pricing in a 56% chance that the Fed will raise its benchmark federal funds rate by a quarter of a point, to 2.25%, at the conclusion of a two-day meeting on Oct. 29. Traders widely expect the Fed to keep rates at 2% at meetings in June, August and September.
There have been calls for the Fed to, at the very least, leave rates alone for the foreseeable future. Critics of the Fed have maintained that a relatively low federal funds rate, an overnight bank lending rate that affects how much interest many consumers and businesses pay on loans, has weakened the dollar and helped fuel the boom in commodity prices.
What do you Think?
