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Fed Rate Forecast Update
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LOS ANGELES -- The FOMC Meeting last week
indicated in official statements that we have been experiencing significant
growth in the US domestic job sector. Alongside that, the Fed indicated that
dropping oil pricing means that the Federal Reserve will be forced to continue
measured and gradual increases in
mortgage interest rates for an indefinite span
of time.
In a statement made to CNN by Drew Matus, senior economist
with Lehman Brothers, it was mentioned, "Growth is picking up in the labor
market. People are returning to work, working longer hours and making more
money. This shows that the economy is healthy."
There are two sides to the proverbial coin on our economic status right now.
Heads:
We are experiencing job growth in a measure that is stronger than originally
projected by economists in Washington. In addition, we've experienced growth in
sectors of payroll and hourly wage.
Tales:
The growth of job availability coupled with payroll and hourly wage increases
has many of the same economists left with worry that these factors will
inevitably lead to inflation across the board at the consumer level of our
economic state.
Currently, the
Fed rate at which banks charge one another is
at 3 percent, according to FOMC updates last Tuesday. Depending on what happens
in the US Bond market in coming months, the Fed will likely hike bank
interest
rates to the 4 percent marker. It is difficult for me to speculate today as to
what span of time will pass in which the Fed will achieve the 4 percent mark.
Unofficially, I say that early to mid 2006 is a safe bet unless the economy
pivots in a peculiar direction causing panic by Alan Greenspan and Friends.
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