One of the tools that keeps inflation in check is higher interest rates. So, with the Fed rate cut on Wednesday, the risk of increased inflation becomes more real.
Why?
Well, despite the housing market, economic growth has still been a reality in the U.S. While the economy may expanding slowly, it is still expanding. So, even though the last two rate cuts were meant to help ease pressure on the housing market, the second might have been overkill, reports Boston.com:
Technorati Tags: Fed rate cut, Fed rate cut inflation, Fed rate cut Wednesday, higher interest rates, housing market, mortgage loan blog"The Fed slashing rates in this environment is kind of like watching your neighbor start up a barbecue with a gallon of gasoline and a Zippo," Yamarone said in note to clients. "You get the feeling that the Fed may be stoking one heck of an inflation inferno. "
Add to:
