Well, the fed is meeting again shortly, and it appears that they are going to hold the fed funds rate at its current levels.  While I’m personally happy they are doing this (I have a floating rate HELOC), I’m not sure  this is the best policy given our current ecnomic difficulties.

I am not a fan of lower interest rates, given our current situation.  It is my opinion, that the fed should take back the last .25% cut, and raise the rate at its next meeting.  After making one adjustment to the rate, they can hold tight for six to nine months to allow economic activity to stablize before moving into a longer tightening cycle.

By raising the fed funds rate by .25% at the next meeting, the federal reserve provides a very, very clear signal that they are serious about inflation and the dollar.  A stronger dollar means lower relative oil prices and that is good for our economy.  It isn’t the end of the oil issues, but it will help to stem the inflationary pressures of rising oil prices and the ecnomoic stress of gas prices on the consumer.

What are your thoughts?

Categories: Investing