The FOMC meeting next week sets the stage for the Fed to begin discussions on reducing or eliminating future rate cuts. The first quarter has passed and many corporations (non banking) are still posting respectable earnings results. The Fed is going to have to balance the huge spike in oil prices versus the housing market that has yet to show signs of a recovery. Most economists now believe the Fed will probably cut the fed funds rated by .25% as they are concerned with how fast the dollar is losing value and the food shortgages in the world economy. The banking system is going to have to show some resiliancy and not simply rely on continued fed rate cuts to improve liquidity. The market could significantly improve if the government is able to pass legislation targeted towards stimulating home buying and reducing foreclosed homes and their excess inventory. This would be a good first step to help home buyers take advantage of historically low mortgage rates and home price points not seen in the past ten years.

4-25-2008©LowRateMortgage.com

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