Tuesday, August 09, 2005

Fed to raise rates for the 10th time straight

Reuters
WASHINGTON -- the Federal Reserve raised a key US interest rate a quarter percentage point on Tuesday, offering no sign after a 10th straight rise that it was ready to end his campaign a modest increase to curb inflation.
the US central bank's policy-setting unanimously voted to lift the benchmark federal funds rate, which can sway borrowing costs through the economy, to a four-year high of 3.5%. remember how all this started?

The panel said rates are still low enough to lend support to the economy and repeated that it expected to continue to remove monetary stimulus at a "measured" pace, suggesting further quarter-point moves ahead. same thinking years back

In an effort to head off inflation risk in a growing economy, the Fed began in June 2004 to push up the federal funds rate that banks charge each other for overnight loans from a 1958 low of 1%.

The Fed funds rate has risen 2.5 percentage points over that. And economists expected to hit 4% or higher by the end of the year.

every time Alan Greenspan speaks, I lose money.
If I remember, the Fed's raise the interest rate to head off inflation several years back however, they did not take into consideration that we are now a "global" economy and things move a lot faster than when they used to.

In my opinion, if the feds continue to raise interest rates, this once again will prevent companies from expanding and borrowing money which would in turn once again cause more companies to go out of business and increased unemployment.

Way to go Mr. Greenspan

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