There has been quite a bit of talk about the Federal Reserve cutting rates again. With the last decade being substantially lower than they have been for many years, some are wondering why the rate cut? When you dig into it a little more you can see the strategy behind it.
We are experiencing an economic boom
The economy has been doing great, heating up year after year. Stocks are doing well, peoples retirements are doing well and the population seems to be spending money because they are earning it. The Federal Reserves job is to maintain the economy as steady as possible, they do this my controlling the flow and cost of money to the banking industry; if they make money accessible for a good price people will spend it and the economy flourishes, but let this go on too long and we see inflation (which can lead to a recession if it happens too quickly). The Federal Reserve wants to lower the rates as a safeguard against a possible recession, the economy is doing well right now but that never lasts forever. If they can gauge what a decrease in rates will do right now, it may help them better prepare for a recession.
Other reasons they may be lowering the rates
Our country is in a trade debate with China right now. China is a leading contributor to American products and services. If these negotiations go smoothly we could be in a good position, but if they do not; we may experience a recession or worse. The Federal Reserve is stimulating the economy in preparation for the worst (just in case)
How much lower?
A month ago it was anticipated the cut would be .25%, but we’ve been hearing it could be as much as .50% which would make rates lower than they’ve been in 3 years. This would open up purchasing, allow people to buy more homes and heat up refinances as well.
What to do?
That part is simple, the Federal Reserve adjourns its meeting Today 7/31. If you’re thinking about refinancing or buying a home ,Contact me Today and see what rates are doing, it could save you thousands. If you want to also find out online you can do so here:
Thanks for reading
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