Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Federal Reserve Raises Key Rate Target to 2.5%
Wall Street Journal ^ | February 2, 2005 | GREG IP

Posted on 02/02/2005 11:42:34 AM PST by presidio9

The Federal Reserve raised its short-term interest rate target by a quarter of a percentage point for the sixth time, and signaled little change in its plan to continue raising rates gradually in the months ahead.

The rate change, which was expected, brings the target for the federal-funds rate, charged on overnight loans between banks, to 2.5% from 2.25%. It was 1% last June.

The statement accompanying the rate change was almost identical to that issued after its last meeting on Dec. 14. Economic growth is "moderate," the jobs market is improving "gradually," and inflation is "well contained." It said it could continue to raise rates at a "measured" pace, and that risks to both economic growth and price stability were "roughly equal."

The move was unanimous among the 12 voting members of the 19-member Federal Open Market Committee, the central bank's decision making body.

The lack of change to the Fed's message reflects the fact that the economy and inflation have largely progressed as expected for the last few months.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Breaking News; Business/Economy; Culture/Society
KEYWORDS: buygoldnow; goldbuggery; goldgoldgold; goldmineshaft; goldshillery; privatebankers; takethegoldmineshaft
Navigation: use the links below to view more comments.
first 1-2021-4041-6061-64 next last

1 posted on 02/02/2005 11:42:34 AM PST by presidio9
[ Post Reply | Private Reply | View Replies]

To: presidio9

Bush needs to rain in the Fed bank if housing dips too much.


2 posted on 02/02/2005 11:45:01 AM PST by sr4402
[ Post Reply | Private Reply | To 1 | View Replies]

To: presidio9

They must see some good signs of economic growth over the next few quarters that may need the reins pulled to keep it from becoming over-inflationary. Keeping a steady growth without the spikes.......


3 posted on 02/02/2005 11:50:08 AM PST by Red Badger (ANONYMOUS IRAQI VOTER: "I dipped it deep as if I was poking the eyes of all the world's tyrants.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: presidio9

Heck I hear this morning it was going to be raised a 1/2 point........


4 posted on 02/02/2005 11:54:42 AM PST by OXENinFLA
[ Post Reply | Private Reply | To 1 | View Replies]

To: OXENinFLA

hear = heard


5 posted on 02/02/2005 11:55:08 AM PST by OXENinFLA
[ Post Reply | Private Reply | To 4 | View Replies]

To: sr4402

"Bush needs to rain in the Fed bank if housing dips too much."

No financial expert here, but from what I understand we're experiencing a rate hike in short term rates but steady to falling long term rates.
This should insulate the housing industry at least for now?


6 posted on 02/02/2005 11:55:38 AM PST by Ramcat (Thank You American Veterans)
[ Post Reply | Private Reply | To 2 | View Replies]

To: presidio9

Fed Reserve Technocrati strike again...

Marx would be proud.


7 posted on 02/02/2005 11:56:36 AM PST by adam_az (UN out of the US! - http://www.moveamericaforward.org/?Page=Petition)
[ Post Reply | Private Reply | To 1 | View Replies]

To: presidio9

Ham on rye, kiss your sister, as advertised.


8 posted on 02/02/2005 11:59:54 AM PST by groanup (http://www.fairtax.org)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Ramcat

Some adjustables are tied to short term rates. But the housing market is not going to collapse even with high rates, only become realistic in certain markets. People who are currently buying $600,000 houses with interest-only or adjustables are speculating on price increases. That speculation, and the corresponding ridiculous prices in certain markets, will end with higher rates. And that is a good thing.


9 posted on 02/02/2005 12:01:15 PM PST by palmer ("Oh you heartless gloaters")
[ Post Reply | Private Reply | To 6 | View Replies]

To: sr4402
Housing rates are more affected by the 10 year Treasury...which is down to around 4.15% or so.

That's still pretty low; you'll see common home mortgages at 10 Yr Treas + .5% (perhaps not the average rate, but still common)...so 4.65% should be doable right now.

...And home loans under 5% while our economy is growing (new home starts are at historical records) are good deals.

10 posted on 02/02/2005 12:02:29 PM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
[ Post Reply | Private Reply | To 2 | View Replies]

To: sr4402
Bush needs to rain in the Fed bank if housing dips too much.

Fannie Mae is ticking bomb. When she blows, there's nothing Bush will be able to do about the damage to the housing market.

11 posted on 02/02/2005 12:04:43 PM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Ramcat
No financial expert here, but from what I understand we're experiencing a rate hike in short term rates but steady to falling long term rates. This should insulate the housing industry at least for now?

Given the GSEs make their money by borrowing short term and lending long, NO. Given that they've been borrowing Euros, Yen,Yuan etc. short term and lending dollars long term, Hell No.

12 posted on 02/02/2005 12:07:31 PM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
[ Post Reply | Private Reply | To 6 | View Replies]

To: adam_az; wardaddy
"Marx would be proud."

No, Marx would be freaked out by a free Market that permits corporations to get interest-free money by issuing stock, by private home-ownership, and by a mortgage industry that gets and loans more money to and from private homeowners than from the government.

Keep in mind that just because *banks* may follow the Fed's lead on interest rates, that the private Market still sets interest rates on Treasury bonds, treasury bills, and home mortgages (among other things).

In fact, Marx claimed that *every* capitalistic society would dive so far and so fast economically that their populations would become impoverished and the people would rise up in armed rebellion.

Marx hasn't been right yet. Compare the U.S. and Japan to Cuba and North Korea after Marxism.

13 posted on 02/02/2005 12:08:02 PM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Southack
Everyone seems to be looking for the dark lining in the silver cloud, but IMHO there ain't none.  We have an economy so solid that the Fed can raise the discount rate and the markets react by going up.  
14 posted on 02/02/2005 12:09:15 PM PST by expat_panama
[ Post Reply | Private Reply | To 6 | View Replies]

To: AdamSelene235
"Given the GSEs make their money by borrowing short term and lending long, NO. Given that they've been borrowing Euros, Yen,Yuan etc. short term and lending dollars long term, Hell No."

That's backwards. Declines in the Dollar (as implied above) drive *up* home prices.

15 posted on 02/02/2005 12:09:34 PM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
[ Post Reply | Private Reply | To 12 | View Replies]

To: presidio9

They serve their masters well!


16 posted on 02/02/2005 12:09:55 PM PST by hardhead ("Curly, if you say it's a fine morning, I'll shoot you!" - John Wayne, McLintock 1963)
[ Post Reply | Private Reply | To 1 | View Replies]

To: expat_panama
"Everyone seems to be looking for the dark lining in the silver cloud, but IMHO there ain't none. We have an economy so solid that the Fed can raise the discount rate and the markets react by going up."

Precisely.

17 posted on 02/02/2005 12:10:25 PM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
[ Post Reply | Private Reply | To 14 | View Replies]

To: Southack
That's backwards. Declines in the Dollar (as implied above) drive *up* home prices.

No, expansion of credit plus false incentives for home indebtedness (not ownership) inflates home prices. This ultimately leads to dollar declines, but as I have said many times, inflation is neither instantaneous or homogeneous.

(here we go again)

18 posted on 02/02/2005 12:12:46 PM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
[ Post Reply | Private Reply | To 15 | View Replies]

To: expat_panama; Southack; Grampa Dave; Dog Gone; BOBTHENAILER
"Everyone seems to be looking for the dark lining in the silver cloud, but IMHO there ain't none. We have an economy so solid that the Fed can raise the discount rate and the markets react by going up."

Oh!!! I love it when ya talk dirty like that!!!

19 posted on 02/02/2005 12:15:17 PM PST by SierraWasp (al-Najr, 38, after casting a ballot for the first time in his life. "I get to say I'm human now.")
[ Post Reply | Private Reply | To 14 | View Replies]

To: presidio9

I'm locked in 30 at 5.


20 posted on 02/02/2005 12:16:37 PM PST by sully777 (It's like my momma always said, "Two wrongs don't make a right but two Wrights make an airplane.")
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-4041-6061-64 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson