Will the Fed slash rates again this week?

by December 10, 2007 • 0 comments

Since the rate cut in October, “credit has become harder to obtain, Wall Street has convulsed again and the housing slump has intensified,” according to the Associate Press.  The rate, now at 4.5% is expected to be cut again this week in an effort to pump more money into the economy, curb the growing housing slump, and ward off an economic depression.  If this happens, it would be expected that commercial banks would lower their prime lending rate, now at 7.5%.

Entire article click here: Fed Seems Poised to Lower Interest Rates 

One of the comments on The Huffington Post stated ” The Fed has determined to print and lend more paper money in an effort to delay the impending economic bubble burst. Since the interest rate spread between what banks and institutional lenders pay the Fed and what they charge their borrowers is so great, there really is no need to lower the rate. The announcement of a Fed rate reduction is simply to advise Wall Street that rather than allow market forces to work, our Govt. will just keep issuing more money to be distributed through the economy. The effect of this policy will cause a free fall in the dollar and runaway inflation. ”  I don’t know that I disagree.

As much as I would like to agree that dropping insurance rates would turn around the market that we are in, I just don’t think that will work.

What are your thoughts?

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