St. Louis Real Estate Blog

Federal Reserve expressed concerns yesterday, and revealed plans to keep interest rates low

August 11th, 2010 7:41 PM by Melanie Mitchell - Team Lead/Listing Specialist

The Federal Reserve is growing increasingly concerned about the pace of the economic recovery, and seems prepared to take even further action to shore it up.

The Fed said Tuesday at its Federal Open Market Committee meeting that it would spend a relatively small amount of money -- about $10 billion a month, economists estimate -- buying government debt. The move is designed to drive interest rates on mortgages and corporate borrowing at least a little lower and help the economy grow faster.

The Fed decided on leaving its target on the fed funds rate at its current range of 0 to 0.25%, but it also seemed to pave the way for a possible furthering of its "quantitative easing" policy.

Coming into this meeting - a gathering that was eagerly anticipated despite the universal understanding that the Fed would not touch interest rates - there was plenty of chatter that central bankers were set to take other actions besides the target on the fed funds rate.

Home buying is stagnant, unemployment is stuck at relatively high levels and despite low interest rates lending is lackluster. At the same time, while there is little evidence of the inflation that could come with such easy money there is nevertheless the underlying fear that the loose monetary policy is laying the groundwork for inflation.

Knox Mailes, Integrity Land Title Co. Inc.

Posted in:General
Posted by Melanie Mitchell - Team Lead/Listing Specialist on August 11th, 2010 7:41 PM


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