Fed Will Raise Rates

Today is Mr. Greenspans turn to show the world who the REAL boss of the American economy is! It is expected that the Fed Funds Rate will rise by 0.25%. This is the interest that banks charge each other on overnight loans so this rate will go from the current 2.75 percent to 3.0 percent.

A number of things have come to light since my last posting - which by the way as almost ten days ago - wow - how time flies. The commerce department has reported that personal income rose by 0.5% - while personal spending rose by 0.6% - and an average family saved only 0.4% in the month of march! So, apparently, the idea is spend spend spend - someone one else will pay the bill later. No wonder Americans have a federal government that does the same. You would think this way of doing things would catch up with us sometime. I guess onces the Chinese worker makes more than $10/week - we’ll see something.

Other than that, the economy didn’t grow as fas as expected in the first quater of 2005 - which means inflation is not as much of a concern as they have been saying. Mortgage rates should stay relatively stable with minor fluctuations here and there. However, don’t be taken aback when rates rise today - I told you so.

As always, feel free to write to me, and remember to visit www.aimeeloans.com for all your home financing needs!

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