Fed stuck in a tough place
Conventional wisdom is that the Federal Reserve will lower interest rates when they meet, mid-September.
Access to credit is tightening, and threatens to derail the entire US economy, according to some. The Fed has no choice but to make it cheaper to borrow.
But, really, why would they?
As Holden Lewis points out:
In the 12 months ending in July, overall prices went up 2.4 percent, and core prices (excluding food and energy) went up 2.2 percent. Those rates are higher than what the Federal Reserve desires.
In the last three months, overall prices have risen at a 4 percent annual rate. That’s mostly because of a huge 0.7 percent increase in May. Overall prices advanced 0.2 percent in June.
I’m going to go all contrarian on this, and say the Fed will NOT lower rates in September.
We’ll see.
More: Mixed inflation news - By Holden Lewis, Mortgage Matters, Bankrate.com
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