Fed Meeting and Interest Rates

Borrowers are eagerly anticipating another rate cut from the Fed which will have a nearly immediate impact on their home equity loan payments and credit card payments. While short term interest rates on average have fallen in 2007, some remarkable online bank deals still exist. Money market rates from Evergreen Private Bank (5.40% APY, 25K minimum) and EverBank.com (6.01% intro APY, $1 minimum), CD rates from IndyMac Bank (5.65% APY, 4-month CD, $5,000 minimum), and savings rates from Countrywide Bank (5.50% APY, $10,000 minimum) and AmTrust Direct (5.36% APY on new accounts, $1 minimum) are all rates available to online banking customers. A surprising twist of this week’s Fed meeting could be if the language by the Fed is viewed as too accomodating the fear of inflation could push longer term bond yield higher, which in turn would push mortgage rates higher. It all comes down to what the Fed says and how the market intepretation of the future direction of interest rates and inflation.