Federal reserve bank has the right to control mortgage interest rates, but it gives only the direction to the financial institutions regarding interest rates.
With the real estate bubble having burst and the financial system in a tizzy over the attending fallout in the mortgage markets, bankers, investors, homeowners, and CEOs are calling on the Federal Reserve’s Federal Open Market Committee (FOMC) to cut the federal funds rate in an effort to avert a financial meltdown. However, the Federal Reserve should see through these self-serving calls and hold rates steady for the time being.
The move by the Federal Reserve to cut interest rates to 2.25% leaves the way clear for the cheapest mortgages in years.
The Federal Reserve cut its primary interest rate from 1.0% to a target range of 0.0% to 0.25% and said it will employ all available tools” to promote economic growth and price stability.
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