US Interest Rates Hold Fast
August 8, 2007
The Federal Reserve yesterday announced its decision to maintain interest rates at 5.25% for the thirteenth consecutive month.
The US Federal Reserve made the announcement that interest rates would remain constant as analysts predicted, even in the face of apparent deep-rooted economic problems.
In spite of growing worldwide concern as to the health of the US economy, the Federal Reserve made its announcement yesterday as anticipated by analysts, maintaining interest rates at their current, consistent level yet again.
Interest rates in most major world economies have been raised over the last year or so in order to reign in global economic growth and avoid an international recession.
The US economy has very much bucked this trend, with interest rates remaining unchanged for over a year as problems within the housing market and sub-prime mortgage lending continue to cause problems for economic growth and recovery.
With many of the major US mortgage lenders approaching financial ruin through the lax regulation of the sub-prime market, and defaults rapidly increasing, housing appears to be the main catastrophe within the US economy.
Despite comments from the Federal Reserve over the last few days as to the lack of impact of recent events in the US economy, indicators from the various US institutions have painted quite a different picture.
The Bank Of England Governor Mervyn King offered some support to the US economy in a statement made today, in which he proclaimed the recent events in the US had fallen short of an international crisis, and that the problems with the US housing and lending markets weren’t likely to have a disastrous effect on other markets.
The news comes as little consolation after volatile trading figures and some poor company results over the last few weeks derived as a direct result of the US situation.