US Fed to keep interest rate at record low
The Federal Reserve has said that it will likely keep interest rates at record lows for the next two years after acknowledging that the US economy is weaker than it had thought and faces increasing risks.
The Fed announced that it expects to keep its key interest rate near zero through mid-2013.
It has been at that record low since December 2008. The Fed had previously only said that it would keep it low for “an extended period.” …
With this announcement we should be able to kiss goodbye to any more interest rate increases for some time to come. Unless inflation roars into a life (a good possibility, as I discussed here) interest rates are here to stay or even fall.
Already our major banks have a announced mortgage rates cuts, only a few days after putting them up. There’ll be more.
Allan Bollard who threatened to raise interest rates with the next OCR must be staring into his coffee wishing that the earth would swallow him up.
With low, if not zero interest rates being the new norm in much of the western world, there will be a rush to the NZ dollar because our interest rates are “high” by comparison to others. This may be a problem to exporters … but a bonanza to every one else.
This is all good news for property. If you listen very carefully you might just hear, way off in the distance, the first tentative whisperings of the next property boom. Keep listening. I’ll swear it’s getting louder.