The Federal Reserve, the board that sets overnight loan rates for banks, is mulling possible actions to help the economy grow. Risky stimulus moves or maintaining course are the two choices being considered. Late Tuesday is when the decision can be made, although trading has been slow.
Federal Reserve has one possible option
The first option for the Federal Reserve is to drop or maintain interest rates. The interest rates set by the fed are used to determine rates for everything from mortgages to paycheck loans. Credit would be encouraged with the lowest rates in history. There is a possibility of deflation occurring making things worse.
Next option the Federal Reserve is looking into
Purchasing government debt is an additional possible option. A personal loans might be given to the government. Interest rates for long term items might go down with the mortgage investments. No borrowing would be stimulated with this plan.
Federal Reserve’s 3rd option
The Fed could purchase securities again also. Securities were bought by the Fed from Fannie and Freddie for about $1 trillion in 2009. Fannie and Freddie still aren’t doing well with all this help that did encourage lending. The amount of money lent out would be more when debt would be guaranteed. The only problem is the Fed would be admitting the economy is really bad with this move, meaning investors wouldn’t even want payday loans anymore.
