Posted on 01/27/2022 10:35:31 AM PST by Signalman
The Federal Reserve signaled Wednesday that it plans to begin raising its benchmark interest rate as soon as March, a key step in reversing its pandemic-era low-rate policies that have fueled hiring and growth but also escalated inflation.
With high inflation squeezing consumers and businesses and unemployment falling steadily, the Fed also said it would phase out its monthly bond purchases, which have been intended to lower longer-term rates, in March.
The Fed’s actions are sure to make a wide range of borrowing — from mortgages and credit cards to auto loans and corporate credit — costlier over time. Those higher borrowing costs, in turn, could slow consumer spending and hiring. The gravest risk is that the Fed’s abandonment of low rates could trigger another recession.
(Excerpt) Read more at reviewjournal.com ...
This will end poorly.
For us people on fixed incomes and most wage earners that un-like government don’t get automated wage increases, A recession and even a Depression will be welcome!
Democrats could nuke the country and the press would report it like the baseball scores.
Bond funds have been whacked to hell for a long time. This is just going to make it much worse. So much for bind funds being a stabilizing factor in one’s investment portfolio.
Biden says inflation is good!...................
Sometimes the short end coming up a little helps the long end go down due to expectations that will chill out economic activity and inflation. The yield curve flattening out...
What do FReepers think about what will happen to the real estate market? I’m trying to decide if a refi of my mortgage to pull some cash out is a good idea at this time. I want some cash reserves available so I can retire this year.
with easy money getting not so easy, it could trigger a liquidity problem in the stock market. you can expect a downturn, so plan accordingly. put some of your portfolio in cash (which is a perfectly valid position) and look for bargain priced stocks in a few months or so.
“What do FReepers think about what will happen to the real estate market?”
I think sales will still be decent.
With higher rates instead of the 400k house buyers might have to downgrade to the 375k house without the home theatre.
3.5-4 million illegal and legal immigrants are coming in each year and record foreign home ownership continues to climb as the US is still the safest safe haven for home and cash the world over.
Keeping interest rates slammed below inflation for over a decade should be a crime. It’s theft.
“I want some cash reserves available so I can retire this year.”
Is that really a good financial idea? Pulling money out of your homes equity to help fund your retirement?
Personally I would continue to work or work p/t before I have another home payment.
Thanks for your insight, setter. I appreciate it. :)
That's like adding the equivalent of 4 major cities of 1 million each, every single year. How long do they think this can go on?
A delay will only increase home-buying fury and prices.
This will cause many people to become upside down on their new houses.
Fed Chairman Jay Powell is taking a midterm election knee for the Democrats.
The Fed should have started quarter point (0.25%) increases six months ago.
Instead, Powell will wait another two months just for the first increase.
He will do a maximum of three quarter point increases before the midterm election.
Those three rate increases will have limited impact on interest rates, and, most important, almost no negative impact on the economy before the November 2022 election.
Rate increases can easily be added to the principle without increasing the monthly payments in any one year.
And if the house price is absurd, the excess can be held in a second escrow account by the mortgage company in trust for the seller.
sales price $500,000
rational price $350,000 [based on 2014 value and 2014-2021 wage inflation]
buyer down payment $20,000
second escrow account balance in trust for seller $130,000
payment out to seller $350,000
If say wage inflation in 2022 is 4%, then $5200 might be withdrawn from the second escrow account by the seller after say February 2023.
Scream when the Fed lowers, scream when it raises, scream when it does nothing.
It is federal government policy to cheat interest rate instrument savers to keep federal financing costs down.
Due to Congress’s fiscal recklessness in the Covid era, cheating interest rate instrument savers has become more essential than ever.
With adjustable rate mortgages, rate cuts don’t lead to absurd home-buying fury.
The home-buying fury has caused building trade rates to soar, which has caused rents to soar.
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