Will Bernanke throw down like Chuck Norris? It is a stretch but stay with me for just a moment. We all know Chuck Norris to be the proverbial tough guy. The question is - will Ben follow in Chuck's footsteps? The Feds will be releasing their minutes on Tuesday afternoon and potentially announcing their cuts in the Fed Rate in hopes of stimulating the economy.
The big question is - do they pull a 1/2% drop in rate (Pee Wee Hermann style) or do they go for the full Chuck and cut the rate by 1%. Inflation numbers for February were lower than expected so it leaves the door open for more aggressive tactics.
What does this mean for the Outer Banks Real Estate and Mortgage market? The phones will ring - many will think the rate on all mortgages will drop along with the fed rate. Typically we see the opposite - the fed rate drops followed by a short term increase in mortgage rates. The last time the fed dropped the rate by .75% - we had three hours of glory (lower rates) followed by two weeks of worsening prices.
My guess is we will see a 1% drop on Tuesday - I know it is on the high side of current estimates but why not swing for the fence.
Update - Feds dropped both discount (overnight lending rate) and Fed Rate by .75%. Home Equity lines of credit should be adjusted down in the morning. The Fed implied there might be additional fed rate cuts in the future.
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