Market Commentary

The FED and Interest Rates

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The Federal Reserve meets today and will release the results of their meeting with an almost certain increase in interest rates. The rate they control, the overnight rate, influences almost all other rates including the all-important mortgage rates.

The fear is that the FED will go too far. The economy is strong, unemployment is low and all signs point to a continuation of current conditions. The FED is worried about inflation, which thus far has failed to appear. They feel they must tighten money supply and they could well be correct. In the past when the FED has taken this path of restricting the economy by raising interest rates they have never succeeded in engineering a soft landing, meaning not causing a recession.

Can they do it this time?

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