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The Fed meets this week, no changes are expected with rates


The FOMC will be holding a meeting this week, don't expect for a change from the previous meeting as they are likely to hold rates at current levels.

The FOMC meets this week, don't expect for Ben Bernanke and the other Fed governors to announce a change to the Fed Discount rate. The Last meeting in June, the Fed indicated they were taking a step back from their previous rate cuts and allowing the markets to begin to work themselves out. Since this meeting the Fed has had a chance to review multiple economic reports such as the employment, cpi and gdp.

The reports show a number of signs that the overall economy is weak and that growth is slowing down. The Fed believes that this slow down in growth will help to suppress the rapid rise of inflationary pressure in the markets that have been brought on by surging energy prices. In addition, the Fed will have the comfort of knowing that oil prices have declined almost $20 over the past thirty days. This should help to bring inflation down in the coming months.

Home prices and the credit markets are continuing to be a drag on the economy. The Fed is likely to have a more aggressive role in the credit markets, while holding out hope that the U.S. real estate market gains momentum from the recent housing bill. Almost all economists believe the housing markets are at least one full year away from recovery.

In summation, expect the Fed to hold rates at current levels, with rhetoric regarding inflation and future economic growth being the main points of concentration.

8-4-2008 ? LoanNetwork.com





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