Presidential Election Fuels Uncertainty around Fed Rate Hike

    trump-vs-hillary-debate

    Donald Trump took an aggressive tack during the recent presidential debate with Hillary Clinton. He also threw punches at Janet Yellen, saying the Fed chair was “obviously political” by keeping interest rates low and creating a false market in equities with its stimulus policies. The Fed chair dismissed Trump’s claims emphatically. Now, whether Trumps claims are true or not, our focus remains at Federal Reserve.

    For several months now, The Fed has indicated that a rate hike is forthcoming. There’s a consensus that the rate hike is likely going to happen in the last quarter after the national election.

    Only last year, Fed raised rates by 25 basis points, a first since 2006 when it last raised interest rates that led to the housing market crash. The real estate market has slowly recovered since then but with the looming interest rate hike again, will it have an impact on the market’s undergoing recovery?

    A rate hike likely won’t impact mortgage rates directly. If you remember, despite the Fed rate hike last year, mortgage interest rates still remain at low levels. But while a Fed rate hike will not have the impact on mortgage rates, the economy, job market, and stocks are important factors to the future of the housing market.

    Things are getting heated with the presidential election approaching and the possibility of interest rate increase happening soon. Everyone is on the edge of their seat, watching what’s going to happen. If Donald Trump wins, some economists predict that Fed will not increase interest rates but may lower it instead to keep the economy afloat. If Hillary wins, they expect the increase will move ahead. Who’s going to win the election is anyone’s guess but one thing is for sure, interest rates will rise, and it’s only a matter of when.

     

     

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