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March 31, 2006
From Fed, More of the Same
The Federal Reserve has raised its benchmark short-term interest rate to 4.75 percent from 4.5 percent, which marks the 15th consecutive increase in the rate by the central bank since June 2004. The statement from the central bank's policymaking body, the Federal Open Market Committee, also suggests that officials may raise the benchmark rate at least one more time in the months to come to guard against inflation. The cooling housing market and higher interest rates will push the Fed to slow down the economy over the next few months; but raising rates too high could result in a slump, while failing to lift them high enough could lead to inflation. The average rate on a 30-year mortgage was 6.29 percent before the central bank started raising the federal funds rate in June 2004 but was 6.32 percent last week, according to Freddie Mac.
Posted by S. Germain at March 31, 2006 08:29 AM