(Ed. note: As inflation spikes according to the news today, and Sallie Mae and Freddie Mac scramble to refinance troubled sub prime mortgages--i thought it well to revisit the post of 12-19-2006. Will the Fed raise interest rates in the face of increasing energy costs? The question is as near as the gas pump. Stay tuned for the answer.)
If you click on the post, you will see the articles today on the horrifying prospect of a large number of forclosures in 2007 on sub-par loans made during the past five years. The other side of the equation is the news today that wholesale inflation has risen.
The Federal Reserve has held the fed rate the last two meetings, and many market analysts have been optimistic that next year the Fed would be forced to reduce the rate to allow the housing market to recover and in other terms allow folks to switch to fixed mortgages if possible.
The problem of course is the inflation numbers. The huge increase in the wholesale prices by some pundits is just a fluke, but ....stay tuned. 2007 will be a real game of chicken, and the stakes are large. Will the Fed resume raising rates to fight the boogie man of inflation and risk disaster or will they ease the rate lower.
You make the call.
The Evansville Observer Archive: The unofficial history of Evansville, Wisconsin from 2005-2013: Thousands of Video and Audio and Articles; Free: To Search scroll to the Search this Blog line and enter name of person, topic, or issue. Then scroll up to see all articles. Or use Google Search by topic. Enjoy.
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