Low Rates Could Be Around for Long Term (NYT) [View All]

[Up2Late]

(I'm wondering if it all isn't some "Under the Table" Kickback, or Payback for not investigating the Mega Profits they are making right now.)

Low Rates Could Be Around for Long Term

By EDMUND L. ANDREWS
Published: June 27, 2005

WASHINGTON, June 26 - Federal Reserve officials, who meet this week, are beginning to suspect that the perplexing decline in long-term interest rates is more than a temporary aberration. The possibility has major implications for the economy, and it creates new puzzles for Fed officials on how they should respond.

On Thursday, the Fed is all but certain to raise the federal funds rate on overnight loans between banks by another quarter point, to 3.25 percent. That would be the ninth increase in the last year, and the central bank is expected to signal that it will continue to raise overnight rates at a "measured" pace.

But the real debate at the meeting is expected to be about the unexpected decline of long-term interest rates, which have kept mortgage rates at their lowest level in decades and fueled what many analysts fear is a bubble in housing prices.

Alan Greenspan, chairman of the Federal Reserve, said in February that the low long-term rates were a "conundrum" but might simply be a "short-term aberration." But Mr. Greenspan and other senior officials are now suggesting that the change is more enduring. The debate is over why the change has occurred, and different theories lead to sharply disparate conclusions about the best way to respond.

<http://www.democraticunderground.com/discuss/duboard.php?az=post&forum=102&go_ahead=doit>
(more at link above)