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Fed Does The Right Thing By Keeping Rates Steady

By Erik Folgate

For the latest statement by the Fed and a summary of their meeting, read this article by CNN Money.

The Fed met today, and for the first time in a year, they did not raise the interest rates. I think this is a smart move by the Fed. This shows that they are confident in our economy and the steady, consistent growth it has shown in the past few years. It is unprecedented that our economy has survived the most gruesome terrorist attack in American History, record oil prices, and a housing bubble that swelled up to the size of a hot air balloon and popped faster than you could say, “Do you want to buy my house?”. Much of this has to do with the Bush tax cuts that were put into effect in 2003. The tax revenue has been up, more jobs created, and more disposable income for consumers to save and spend.

The Fed was making a statement that the housing market is at the end of its drop. They are also not too worried about credit card problems and inflation. I think they need to take a closer look at what credit cards are doing to people. It would be worse for them to hike up the rates, because then people would really be reeling in a swamp of credit card debt with astronomical interest rates. You know my take on credit cards. I don’t think their a tool, I think they destroy more check books than they help them. The problem is that we are not disciplined enough to allow five companies to extend thousands of dollars of unsecured debt all at once. The government has not addressed the issue of credit card debt in America, but they will once it starts adversely affecting the economy, and this is only a matter of time.

What do you think? Do you think it was smart for the Fed to keep the interest rates steady for now? Post a comment with your thoughts.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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Comments

  • Thomas

    I think that the fed hasn’t raised the interest rate in over a year. It has been steady since the start of 2006. I believe that your first sentence may be incorrect.

    Besides that, I enjoy reading your blog. Keep up the good work.

  • Eric

    I’m not sure, personally. It can go either way. I watch Cramer’s blow-up on MSNBC and now I’m a little confused. I wonder what the brokers and traders think.

  • http://www.lostspots.com Amber Yount

    I heard everyone was hoping the rates would lower. I was definately hoping-we’re trying to buy our first home, we coulda gotten a fixed rate for only 5.7%, until they fguredout we were self-employed, and een though our stubs show we make $120,000 a year, our tax returns show we only make $8000. Damn business. Tax write-offs are like a catch-22…yes you dont have to pay as much taxes…but then you cant get a mortgage :(

  • author

    Hey thomas, I read it that some kind of rate has risen since June. There are different rates for different loan situations.

    Amber, I was hoping it would lower, too. But, at least it didnt go up for those who have an ARM!

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