Fed Ignores Fiscal Cliff, Conducts Business As Usual
As always, the Fed notes that this low rate policy is contingent upon inflation remaining within acceptable limits.
The MoneyRates outlook
What does this mean for various forms of bank rates? Well, it will take a sustained period of decent economic growth to bring unemployment down to 6.5 percent, so expect most savings account rates, money market rates, and short-term CD rates to remain below 1 percent through at least most of 2013. If the economy does start to strengthen, expect long-term rates like mortgages to be the first to start to rise.
Whether the Fed chooses to acknowledge the fiscal cliff or not, it could have a tremendous impact on bank rates. While there is not much room for rates to fall further, too much immediate austerity could hold those rates down for an even longer period, while an enlightened solution could bring a turn in rates closer to the first half of next year.
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