FED: MORE RATE CUTS POSSIBLE!
DECEMBER FED MINUTES SEE CONTINUED EROSION IN HOUSING, CREDIT MARKETS!
In last month's meeting of the Federal Reserve Board Open Market Committee meeting, the Fed decided to lower the Federal Funds Rate, or the rate at which banks lend money to each other, to 4.25%, down from 4.50% set in October. They also lowered the discount rate to 4.75%. Some, but not all, adjustable rate mortgages are tied to Fed benchmarks.
Further review of the minutes from the FOMC meeting, however, indicate that continued rate cuts are likely - perhaps further impacting, hopefully favorably, the mortgage rate climate for home buyers.
Several members of the Committee stated concern that the continuing weakness in the housing and credit markets has reduced overall consumer spending.
According to the minutes, the FOMC "agreed that the housing correction was likely to be both deeper and more prolonged than they had anticipated in October." Meanwhile, they added, "could persist for quite some time," although some on the committee foresaw the possibility that economic conditions could reverse, "in which case a reversal of some of the rate cuts might become appropriate."
They suggested the need to closely monitor the U.S. Economic situation for signs of continued weakness in the housing and credit markets, and consumer spending overall, as well as trends toward inflation. These factors will control their future stance on key interest rate reductions.
Review the entire Wall Street Journal Story, from today's edition, written by reporter Brian Blackstone.
DEAN MOSS & DEAN'S TEAM CHICAGO
