January 17, 2023 | Warren Shoulberg
Predicting the actions of the Federal Reserve when it comes to raising or lowering interest rates has become as difficult as forecasting the weather…or who’s going to win the next Super Bowl.
But after numerous hikes last year that saw interest rates climb from zero at the start of 2022 all the way to the current level of 4.5% for the benchmark rate – often in large half-point increments – it appears that the Fed is going to go slower and more gradual, at least in the foreseeable future.
Of course, interest rates are a key factor in new home construction and business borrowing costs and the increases have been used to moderate inflationary pressures that rose to their highest levels in decades in 2022.
Now, according to Bloomberg, “the Federal Reserve is on track to downshift to smaller increases following a further cooling in US inflation.” However, the news service added that rates are likely to keep going up “until price pressures show more definitive signs of slowing.”
A moderation in interest rates will come as good news for builders and others in the woodworking trade who have watched the housing market slow down substantially over the past year. But news reports suggest those in the industry not get too optimistic and look for rate decreases anytime soon. Bloomberg cautioned that “policymakers have emphasized the need to hold rates at an elevated level for quite some time.”
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