Futures predicting 50 bp cut over 25!!!

[The Kin2]

Mid 2008 rates will be at 3%, according to futures. This is great news for consumers!!

 

[Thermactor]

Great news indeed. Prices going up. Consumers are going to love $5.00/gallon gas.

 

[TravelTrader]

Yes, please explain why that is good for consumers. The fed funds rate does not change consumer interest rates.

 

[The Kin2]

of course they change consumer interest rates. Remember when we had 20% mortgages?? (because I can't)

As for $5 gas. Its still too low. Transit fares are anywhere from $4 to $7 round trip. It would be ideal if gas exceed the cost of transit. Bring on 5 6 and 7 dollar gas. All thats needed is a terrorist attack on Saudi Arabias oil infastructure. America would be better off for it

 

[TravelTrader]

Consumer interest rates are dictated by supply and demand. Changing the fed funds rate can increase the supply of money in the banking system and thus have a small influence, but for the most part doesn't do anything for consumer rates. Many times consumer rates have gone in the opposite direction of the fed's movement.