Inflation/fed funds rate

[Zoe]

Looks like Federal Reserve Bank may raise the fed funds borrowing rate to banks in order to slow money supply due to inflation. Trump hired a new federal reserve bank chairman because the old one would not cut fed funds rate.

Federal Reserve Bank has no choice but to raise the Fed Funds rate due to inflation Trump has created.

 

[Fernando]

FED has no choice but will hold it steady until November election. Expect inflation to continue and high mortgages.

 

[Zoe]

FED has no choice but will hold it steady until November election. Expect inflation to continue and high mortgages.

Yeah. It impacts credit cards and like personal loans more directly like car loans. It kinda hurts appraisal business because many people have like 2-3% mortgage rates. I will not help lower long term mortgage rates. Inflation won't lower commercial lending rates because many times they are tied directly to the fed funds borrowing rate. Many commercial loans are on a floating rate with fed funds rate. 2 or 3 % over the fed funds rate or more.

Our govt is paying over a trillion a year in interest on 40 trillion in debt.

 

[Zoe]

Sometimes commercial loans are on rate lock for various terms. Like 1 year, 2 year, 5 year, etc rate lock. So any renewing this year will likely be at higher interest rate than they had. If they were 1 year ago, maybe not but if they were 5 or 10 year rate lock based on fed funds borrowing rate, their interest rate is likely going to rise. Helps shrink the money supply and inflation.

The FED Reserve Bank has to be careful and balance with employment because they don't want a depression. The last employment rate numbers were not impressive so they are likely stay still a little bit.