The Government May Actually Be Leaving The Free Market
Well?perhaps not, but it looks like the Federal Reserve may be stopping any new efforts to ?revive the economy? at its meeting this week. According to economists, Chairman Ben Bernanke and his colleagues do not want to overdo the stimulus medication and that ?motivating the economy? by way of the Fed might stir up the flames of inflation later on, so the Fed is predicted not to make any additional moves this week.
Through the preceding year, the Fed has finished everything it could do to attempt to help invigorate the economy as well as injecting $1.2 trillion into the financial system in an effort to reduce interest rates. The lower interest rates were meant to get consumer spending up.
The Fed is also anticipated to hold the key lending rate to banks at the record low of almost zero percent. It has said in the past that it will keep the rate low for ?an extended period.? Economists believe that the rate will stay between 0 and 25% awaiting sometime in 2010.
It is appearing increasingly like a number of the things that the state has done to help the financial system has had somewhat of an effect?after all it was just in January at which time the primary stimulus was approved and took effect. Ever since that time, home prices have stopped waning as quickly and are in reality beginning to stabilize in a lot of places, and in the last month, shopper spending has amplified and the unemployment rate has also began to decelerate. A number of analysts believe that the financial system is going down, but at a much less significant rate than the closing quarter of 2008. The April-June quarter is stuck between a 1 and 3% fall, while the ending quarter of 2008 was 6.3%.
Certainly, some of the difficulty is that we will not identify whether the economy would have recovered as rapidly without the government interfering as much. A lot of the government agencies we currently have in place were put in place to keep a depression like the one seen in 1929 from happening again.
A dilemma that is occurring now is that mortgage rates have began to surge again, and at the same time as mortgage rates have to increase, presently the housing marketplace is still aching and home buyers are still a bit sparse. To assist, the Fed might come to a decision to start purchasing more mortgage backed securities as well as state debt to help force the rates of mortgages downward.
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Tags: ben bernanke, consumers, economists, federal reserve, government agencies, interest rates, jobless rate, Mortgage rates
