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Will the Fed raise interest rates or cut them when it makes its next move?

"Fed has been concentrating so much on inflation that it has overlooked the reality of a huge budget deficit, housing overstock, subprime lending problems, a dollar losing its lustre as safe haven currency...America under Bush losing its influence even on impoverished nations like North Korea, Pakistan and Iran who have their bargaining power bolstered by miscalculated adventure in Iraq...all this will result in further erosion of confidence, coupled with world's highest indebted country's leader lacking any vision and humility...interest 25 basis point reduction will be temporarily relief but the solution will have to wait till 2009 when new pragmatic president takes over." -- Ashok K. C., Ontario, Canada

"I think the Fed will hold rates steady for the next couple of meetings or so, but further down the road the risk of an increase in rates is real. If everyone emphasizes how little of an impact the subprime mess has on the rest of the market, then one would think inflation should be of primary concern now. Let’s face it: inflation is still above the comfort zone. It seems as though many are now getting comfortable being above the comfort zone. The FOMC might be in for a surprise later this year." -- Stefan F., California

"Increment 1/32 of a point... nah, they aren't going to raise, but they ought to; 1/16 point. Just to be irritating. If hey ain't gonna move, why waste time on a meet?" -- Don O., FL

"When the Fed was created, it had one job. Its one and only job is to control prices. It is failing to do this by being on hold. Inflation is worse than most think, $7 for a Subway sub is ludicrious. They need to raise rates even though it will slow the economy more. We are fighting a war, so we will not go into a recession however growth will slow dramatically. The fed needs to do their job and raise rates." -- Paul, Naples, FL

"Stagflation is the real threat. Mr. Bernanke should understand that growth needs to be protected at the expense of slight inflationary concerns. Cut rates now, protect growth and keep the economy humming along and let inflation which is a global issue work itself out in the market place." -- Erik, CT

"The FOMC has kept interest rates too low for too long. Easy money availability and the expectation that rates will remain low has made people with marginal credit and high risk takers with more substantial means to stretch their financial capabilities beyond common sense in the long run. Easy money creates a sense of low risk in financial matters. It’s like buying equities on margin." -- Steve W., Indiana

"The FED will hold rates till after first quarter inflation data comes in. The bigger concern however, is the subprime market which has the highest default rate at 13%, so the next move will be to lower rates to ease the pain from this market strain, but not till later this year. The lowering of rates will elevate the default rates in this sector that have floating rates (ARMs), and allow the default rate to go back down." -- Matt A., FL

"The Fed will hold today and raise a quarter next time around. This summer will see the economy take off more than expected due to all the depression thrown out there by the so called Wall Street experts. People are used to the run up and "better" life of the past few years and will start living it again once the weather improves and the summer season kicks in. After all... since when does Wall Street ever really get it right?" -- Bill C., New York

more responses...

"I believe the Fed will drop the interest rate by 25 basis points, maybe not this time, but he will have to at the next meeting, due the threat of a recession by the end of the year." -- Robert G.

"The Fed will not change rates. The economy has soft landed and with housing starts beginning to show improvements, the Fed will worry more about inflation than stimulating the economy." -- Mike & Teresa H., Auburn, AL

"The Fed will cut rates whenever it makes its next move, which will probably be sooner than later. The Fed faces a greater risk than inflation—it faces a crisis in the mortgage lending and home building markets. It must reduce rates to ameliorate the pain those markets are suffering." -- Gary W. H., Birmingham, AL

"Please, stop asking for lower rates which will cause a continuation of this mess. I HOPE they raise rates and STOP the market downslide. You CANNOT lower rates and reward these paper companies for their greed and errors. Investors know that without raising rates and putting the brakes on the evil doers - the market will continue down. So, why invest until the Fed acts responsibly?" -- Roy, TN

"If the Fed raises again, folks with adjustables and home equity lines are going to be homeless!" -- Ninette M., MA

"I believe the Fed will HOLD at this level for now." -- William B.

"The Fed will hold steady, not necessary to cut or raise until we see where housing and inflation are going after the first quarter" -- Chuck M.

"Hold ready steady, with two raises to come in quarter three and quarter of 2007." -- Robert L., Texas

"The Fed will leave rates alone. The economy is in a pivotal position, however, moving at this time would only muddy the water." -- Ron S. Hawaii

"The Fed will leave interest rates the same because it still is not sure about inflation problems down the road." -- Dennis G., California

"The Fed will remain on hold for a while. The concerns in the housing market override otherwise a pretty strong economy. Core inflation, although at its peak, is still above their comfort range. Overall, the economy seems well-balanced and fed rates look to be neutral to growth. The perfect combination." -- Evan F., Canada

"The Fed will do nothing of course (i.e. another pause) even though inflationary readings remain well above their comfort zone." -- Chris R.

"The next move has to be down a smidgen like 0.125 on the low side and 0.25 on the high." -- John D.

"I think we will see the rate remain the same; it seems we are stable at the moment. The housing market did better than expected, and the stock market bounced back. Why try to fix something that's not broken?" -- Walter M., Texas.

"The Fed will leave interest rates unchanged for this period." -- Calvin W.

"Fed will raise rates ... inflation is the priority." -- Mike K.