Rate Drop On Halloween..Trick or Treat?

As the Fed prepares for yet another rate drop on short term rates on Halloween, will this drop spook or please the general public. A quarter percent rate drop is viewed as more symbolic and is being sold to the average consumer as “look what your government is doing to save the economy”.

The ripple down effect will be so minor that the change will have little or no effect on the bond markets. We may see lower interest on our credit cards but rates for home loans are not effected. Here in Central Florida where our economy is heavenly depended on vacationers from around the country, cheaper money will keep families traveling to the Sunshine State.

Any rate drop will be viewed as a treat but let us not be tricked into believing that one rate drop will solve all our credit problems. It may take deeper cuts to prevent our economy from sliding into recession.