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February 09, 2006

Is the Fed almost done?

The Federal Reserve has been increasing the interest rates it controls for 18 months now, and N.C. State University’s Mike Walden says many economists think the Fed is ready to stop.


“They think that maybe we’ll have one or two more rate increases that will total about a half percentage point,” says Walden, a specialist with the North Carolina Cooperative Extension Service and professor with the Department of Agricultural and Resource Economics.

“This would bring the Federal Reserve’s key interest rate that they track up to a level that’s in line with where they’ve wanted it to be historically. Also if you look at the forecasts for economic growth in 2006, they are around 3 percent – and a lot of economists think that’s exactly where the Fed wants economic growth to be.

“So I think that we should not be surprised if in a month or two it’s announced that the Fed is
done raising interest rates,” he concludes. “And actually that would be very good because it would still leave interest rates very affordable.”

Posted by deeshore at February 9, 2006 07:48 AM

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