Interest Rates – Important Update
It’s been a natural fact that the Federal Reserve Bank was gonna raise the discount rate another 0.25% this December. That would probably raise mortgage interest rates by a similar amount, but there’s a lot more on the horizon. The economy is getting stronger, to the point where the Fed will have to raise the discount more to keep inflation in check. This is tough, because, with the current administration working to remove regulations, replace or fix Obama Care, and lower income taxes, the economy has a dauntingly large upside, making inflation concerns, and hence, higher rates, very likely.
Which brings me to the attached article from the Journal Gazette, reprinted in today’s Union Tribune on page C2. You can read it below. The Federal Reserve Bank is sitting on a huge bond portfolio of $4.5 trillion that it will be starting to sell off very soon. They’ve been talking about it for months. The previous administration bought these bonds over 4 years to keep interest rates artificially low to prop up a weak economy. Now they need to sell them off, and they’ll do so gradually, to impact interest rates as little as possible. But with an improving economy and it’s unavoidable inflation problem, interest rates are, without a doubt, going up. It’s extremely safe to say that they won’t be lower than they are right now.
I haven’t tried to convince anybody to get off the dime and act for a very long time. That time is right now. Don’t miss out!