Fed Bumping Interest Rates As Promised

May 4, 2005 LOS ANGELES -- We all saw this coming: The U.S. Federal Reserve (Fed) has made announcement that they raised interest rates by a quarter of a percentage point Tuesday. This continues a trend set forth by the powers-that-be in elevating mortgage rates throughout the remainder of 2005 at an even keeled pace. Catalyzing rate hikes means that the rate U.S. banks charge one another on overnight loans experienced up to a three per cent push from 2.75 percent. Not bad in the scope of things.

All of this financial news should come as no surprise to those eyeballing the mortgage rate market so far this year, as it was announced long ago by The Fed and widely expected financial markets, analysts, consumers and economists alike. It was a mere ten months ago that The Fed initiated their campaign in boosting rates. At that time the bank rate stood at one per cent, which was the lowest level seen by this country in the last 46 years.

An overall tally shows that since The Fed began its gradual elevation campaign last June, mortgage interest charges have elevated eight times.

The guy holding the pen in all the policy making inside The Fed clubhouse is none other than the widely known, and often criticized Chairman, Alan Greenspan. The reason Mr. Greenspan and his cronies have been on a mission to raise mortgage rates is attributed to a grapple with two economic forces: Rising inflation and continual slowing of overall economic growth countrywide.

What's next? According to Tuesday's statements by the Fed their intent is to maintain that interest rates will continue to rise gradually at what they deem, "a measured pace". If The Fed's trend continues, economists and officials at The U.S. Central Bank indicate that a band-aid can be put on our economic state overall, and inflation will be contained.

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