As signs of the economy begin to improve the Federal Reserve board is expected to keep Key Rates at historic lows. These key rates are what the treasury charges banks to borrow money then in return the Banks loan this money to customers and businesses. The Fed had hoped that by keeping rates low that it would spark consumers to start spending more and stimulate the economy. Currently the Fed charges banks between zero and 0.25% for the lending rate. The Banks prime lending rate which is used to set rates on credit cards, home equity loans, and other consumer loans should then stay around 3.25% which is the lowest in decades.

 

All this sounds like great news but with Banks reluctant to loan and in some cases still pulling back lending in certain segments of the marketplace. It is hoped that with these low rates that banks will begin to free up more credit for consumers. The Fed is also reviewing rescue programs that were put into place to help spur spending. With the economy still frail we may not see any changes in these programs until there is stronger economic news and unemployment begins to drop.

 

All signs from the Fed indicate that we can expect rates to stay low until the end of the year and possible into the first quarter of 2010. With the worst past us now we are in the slow process of recovery. What will the next move from the Fed be? No one knows for sure but base on the current condition of the economy we can expect very little or any movement on the fed key rates.