The Federal Reserve meets today and will decide on what to do about the key short term interest rates.  The stock market is expecting at least a .5% cut in the rate, which would put PRIME at 6%.  This rate only directly affects 2nd mortgages, and doesn't directly affect the long term interest rates.  However, depending on the language the FED uses, the long term WILL react and make a move in one direction or the other.  On the other hand, some people believe that the FED may not cut by .5%, because of the risk of stagflation, which is an economic period of both slow growth and inflationary pressures.  This makes the FED's job very difficult because those are the two main areas they want to protect.  They want solid growth with controlled inflation, both of which are in danger of moving in the wrong direction.  Many think it is time to stop cutting rates and to wait and let the previous rate cuts take affect.  It generally takes at least 6 months to see the affects of rate changes by the FED.  One of the worst things that can happen is to over cut the rates, and create inflationary pressures which will cause the FED to re-raise the rates in the near future.  It may be better to just take out lumps and ride out a short recession than to try to avoid it and create economic trouble down the road.  I hope this helps!

Thanks,

Chris

www.besttnloans.com