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Originally Posted by lust4fia
I thought the FED strategy is to raise rates to combat inflation, increasing the cost of borrowing to slow things down a bit. Conversely,lower rates to avoid a recession, cheaper borrowing to increase activity. No?
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That is right on the money - inflation has been noted by the FED as the reason why rates have not been lowered since being increased over 1 year ago. Inflation is part of the housing market problem - lowering the FF rate now would not only pad the pockets of those that are responsible for this mess, it will directly contribute to housing market inflation - it simply doesn't make sense to reverse the FED noted trend of an up rate environment.
Simply stated, housing costs need to come down and this mess will allow that to happen.