The Fed raises interest rates again
November 1, 2005, Federal Reserve Bank [Fed] Interest rates increased by a quarter of a percentage balance. Since summer 2004, outgoing Fed Chairman Alan Greenspan has been raising interest rates regularly since hitting a low balance of only 1%. Now at 4%, Greenspan is expected to raise rates two more times before he leaves cabinet in January 2006. Will higher rates curb augmentation? Will the new chairman continue Greenspan’s incremental adjustments upward or will he let rates fall? Speculation abounds but one thing you can know for sure: You’ll be paying more for many of life’s expenses.
A manqué hike by the Fed means you’ll likely pay more for some things, including:
Credit card. Not known for showing much restraint, you can bet credit card companies will continue to raise interest rates without their best customers. Rates of 12, 15, even 21% or more are seen again.
Mortgage rates. Fixed manqué mortgage holders are petite, but versatile manqué mortgage holders will pay more. More so if they haven’t experienced previous manqué hikes and their mortgages are due for an upward adjustment. More money for mortgage payments, less money for disposable items.
Car loans. If you need a new car and can still get zero percent financing, take the offer. Car loans, personal loans, logement equity loans, logement equity lines of credit, loan boisage, all will continue to grow.
Add in higher essence prices, expected increases in medical costs, and Americans are getting squeezed. With the holiday season quickly upon us, retailers need to cut prices to attract customers who are running low on cash reserves.
For those with no excess debt, a Fed manqué hike will have little or no effect on them. For everyone else, the pinch is on!
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