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Interest Rates: Do You Think the Fed Will Cut Rates Again?



"Federal Reserve officials are expected to cut interest rates for a second time on Wednesday. .... The Fed's rate decision, which will be announced at 2 p.m. in Washington, will be accompanied by a fresh set of quarterly economic projections and followed by a news conference at 2:30 p.m. with the chair Jerome H. Powell."
 
We would love to pitch a story about this, here are our questions:
 
1. Do you think the Fed will cut rates again?
 
Martin: I think the Fed is in a no-win situation. As the economy is not in recession, it makes no sense to lower rates they using "dry power" now that won't be available when a real crisis arises. However, if they do not, they will come across as doing nothing with the self-inflicted crises caused the executive branch of government. The least objectional decision is to cut rates.
 
2. IF they do cut rates, what do you project will happen to the US Housing market?
 
Martin: While affordability of cheap money helps buyers, the main factors they use in deciding to buy are: the stability of the current economy and an optimistic outlook on the future. Neither is happening at the moment. A rate cut will not cure the disease caused by the administration but rather be a temporary treatment at best.
 
3. According to CNBC, "U.S. homebuilding surged to more than a 12-year high in August. Both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market." Do you agree with this conclusion? Why, why not?
 
Martin: I believe the increase in home starts in August as a result of builders delaying decisions the previous few months. As such, I see it as a blip or one-off as opposed to a trend. Many US markets are in decline and I expect to expand nationwide within 12 months. Having said that, there are always mini up-cycles in an overall declining market. In New York, we are experiencing it the month of September.
 
 
 

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