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re: Powell: Fed can maintain higher rates for "as long as needed"
Posted on 4/17/24 at 8:47 am to Wishnitwas1998
Posted on 4/17/24 at 8:47 am to Wishnitwas1998
quote:
The truth is historically that's not that high of a rate relatively speaking and after going 20 years with near 0% rates it's going to take something significant to reverse course
Its not that high when you could buy a nice house for $80k
Basically every expense has outpaced earnings. A decent house in many areas is $200-$300k, sometimes more than that. Even a 7.5% mortgage on that is prohibitive to the average earner.
Posted on 4/17/24 at 11:23 am to VolSquatch
quote:
Its not that high when you could buy a nice house for $80k Basically every expense has outpaced earnings. A decent house in many areas is $200-$300k, sometimes more than that. Even a 7.5% mortgage on that is prohibitive to the average earner.
But higher rates are how you in theory get housing back to a more affordable level. The rates lower demand which then lowers prices
Notice I said "in theory". As others have mentioned there's a lot of things going on in this economy that have tested that theory. I do argue though if you raised rates high enough inflation would stop, the question becomes how high would you have to go and how much other damage would you do to the economy in the process?
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