The Fed’s meeting this week brought no new news.
They decided to leave the base rate, “fed funds rate,” as is at 0.5% (which means the prime rate consumers get is still 3.5%).
They say however that the “risks to the economy have diminished,” giving some the impression that they may finally feel it’s safe to raise rates. The monthly jobless number, of course, is next week and could give them more positive ammunition.
The experts predict that the jobless number for the month will be 180,000, and that unemployment would remain 4.9%, so we will see.
To round off the week on Friday, we got some disappointing news that surprisingly did not really have the impact you would expect.
The GDP is a measure of our country’s output or production; in other words, the total dollar value of all goods and services produced over a certain time period. So if this number goes down, it means we are producing less, which in turn means maybe fewer workers are needed. The experts were expecting our economy to grow (and it usually does at the end of summer.)
Therefore, economic growth shrunk A LOT to 1.2% instead of the expected GROWTH of 2.6%…
If we are not producing, we cannot sustain jobs, no jobs = no tax base, no tax base, well you know where I’m going with this.
Bad news, and bad news for a healthy economy is usually good, in keeping the rates down or pushing them down further. Surprisingly though, the bond market did not react. Maybe it’s all about the other pieces of the puzzle, the main piece being the jobs report next week.
So after all that, rates remain the same this week.