Why Bernanke Is Ignoring You
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bernanke, feds March 17th, 2008You’d think that lower interest rates would help out struggling borrowers. Yet while the Federal Reserve has moved repeatedly to cut rates, the positive effects of those cuts aren’t getting to those who need them most.
The Fed’s moves have already lopped 2.25 percentage points from the federal funds rate, and with another meeting later this week, many are expecting another full point on top of that. Although the Fed controls only short-term interest rates, its actions inevitably have an impact on the entire bond market and often cause longer-term rates to stabilize or fall as well.
This time, it’s different
Unfortunately for many borrowers, however, the Fed’s actions aren’t having the effect they might have hoped for. After dropping substantially in January, mortgage rates have risen back toward the range they traded in before the Fed started making cuts.
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