Federal Reserve to Meet Again Tomorrow

 

The Federal Reserve will be meeting tomorrow to determine the fate of interest rates, and Chairwoman Janet Yellen is expected to give us some good news later this week about what is likely to happen during the next Federal Open Market Committee meeting this summer.  Based on recent employment data and economic growth data, it’s a fair bet that nothing’s going to happen.

 

Inflation continues to linger below the two percent rate, and markets such as China’s indicates that the global markets are shaky at best. Yet, there are indications that consumer confidence is on the rise. New home construction and remodels are significantly up, and the housing sector labor force is back to work in full force. Stock prices continue to perform, although many economists are waiting for the downturn.

 

One thing to keep in mind, the Federal Reserve is looking for any reason to raise the rates. We keep hearing from them that rates are too low. When the benchmark is near zero, there’s really not a lot of wiggle room if the economy goes in the tank. So, if the Fed does not move to raise the rates this summer, what does that say about the state of our current economy? 

 

Our economic growth was a mere 1.4 percent for 2015’s quarter number four, and wasn’t much better for the first quarter of this year, possibly worse. We’ll know later this week when economic data is expected to be released. Don’t be surprised to see growth under one percent. Does that give us a clear indication of what’s ahead for the rest of the year during an election cycle? That remains to be seen.  Economists are as torn as meteorologists trying to forecast next month’s weather.

 

The Feds have been closely monitoring oil and currency markets and stating the volatility of those markets have been key reasons as to why they have not raised the rates yet this year.

 

For those of you looking to buy a lake home in 2016, there’s a good chance rates will not likely change this summer. Pay attention to what comes out of Yellen this week, though.  All eyes will be on her in anticipation of any clues what the Fed is leaning toward and why.