Aug 29, 2006

After more than 2 years of interest rate increases, we finally got a reprieve earlier this month when the Fed decided to stay firm with interest rates. It is obvious that the Fed is concerned about the weakness in the housing market, and the effect on consumer spending by raising rates, so they paused. There is concern that too many rate hikes can lead the economy into a recession for 2007.

So where will rates go?

The Fed meets again on Sep 20 and the minutes from the last meeting give no indication of what the Fed will do. Thus there is a lot of confusion. Some analysts believe that another rate hike is imminent, while others believe that they will continue their pause, and wait until December for another rate increase.

We will have to just wait and see.....