Fed Expected to Boost Interest Rates

[Khephra]

WASHINGTON -- With the economy expanding at a respectable pace, companies hiring and consumers inclined to spend, Federal Reserve policy-makers can feel comfortable about boosting short-term interest rates for a fourth time this year.

That's the feeling among economists who believe the Fed will stay the course of the current credit-tightening campaign it started in June. Fed Chairman Alan Greenspan and his colleagues want to continue moving a key rate from extra-low levels to more normal ones now that the economy's recovery from the 2001 recession is more deeply rooted.

Despite surging oil prices -- which have retreated in recent days -- inflation isn't an immediate threat to the economy, analysts said. The Fed, however, wants to make sure it doesn't become a problem in the future.

Economists believe the Federal Open Market Committee -- the group that sets interest rate policy in the United States -- will increase the target for the federal funds rate to 2 percent from 1.75 percent at its meeting Wednesday. An afternoon announcement was expected. The funds rate is the interest that banks charge each other on overnight loans and is the Fed's primary tool for influencing economic activity.

http://www.newsday.com/news/nationworld/ats-ap_top14nov10,0,1815682.story?coll=sns-ap-topnews

[BluesInARedState]

1. this will make retired people happy. Anyone...

living off savings income, like my right-wing Aunt. Am not sure of other consequences? Assume this will hurt people financing cars, mortgages, etc. right?


(have been a DU lurker too long)

[nothingshocksmeanymore]

4. welcome to DU

[gottaB]

5. theoretically raising the interest rate should curb inflation

disclaimer: I am not an economist, and most of the time I have no idea what on earth Greenspan is talking about

[newyawker99]

9. Hi BluesInARedState!!

Welcome to DU!! :toast:

[Tracer]

2. I could see this coming.

I have a smallish, adjustable rate, home equity loan that started out at 3.75%. Two months ago the rate went up to 4%. Last month it was 4.25%.

Good thing that I can pay this off in a couple of months.

[DBoon]

3. Depression coming?

One of the things that kept the economy from completely tanking was low interest rates (lowest since the 1950's). Money from refinancing was helping to boost spending.

Does this mean we now grind to a halt?

[Yavin4]

6. Yep.

The re-fi spending party is over.

[ozone_man]

7. I think it's coming.

The grinding halt followed by depression. It's taking it's time getting here, but the credit will begin to tighten and the refinance boom will end, eventually killing the GNP.

The economic growth we have been seeing is not real or sustainable, being fueled by the deficit spending. I don't think there is much risk of inflation. I think that if we devalue the dollar anymore, our creditors will drop the debt they are holding. I think the FED is between a rock and a hard place with interest rates.

[indypaul]

8. B/T/W we also have to

raise the debt ceiling again. Treasury been out of
cash (legally) since October 14. Didn't want to bother
anyone during the busy election season. So we just
borrowed from the cash reserves of the Federal Employees
Retirement Funds. That money will be gone mid-November
though and just in time for Congress to address this
trivial matter. F/Y/I this is called "economic terrorism"
and can be just as deadly as planes flying into buildings
when we are spending in excess of $1 billion a day to
service this ever increasing problem.

[oc2002]

10. The whole economic boom is a farce financed by massive Fed Defic War

The party is soon to come to a grinding halt, it the dollar is to be worth 1/10 of its current value.