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Wednesday, May 09, 2007

 

Burrowing increases. fed out of touch?

And article on Yahoo recently posted that comsumer borrowing in the month of march rose at an annual rate of 6.7 percent. this shows good growth after a slight slump in the first quarter this year.

This sounds to me like the fed is out of touch, after a year of holding the target rate constant, they recently announced that they are continuing to hold the target rate constant. This seems out of touch with the economy.

The article in Yahoo claimed that the high consumer borrowing is remarkable, due to high prices and rates. For this reason and the fact that the first quarter had been week, (growth around 1.3 percent) the fed should have been lowering the rate. It would have helped last quarter and strengthened the consumer spending that had been strong in march, making it potentially even stronger.

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