Federal Reserve cut rates

The economy and housing market is at the center of Fed Rate cut.

The Federal Reserve of the United States slashed key interest rates on Tuesday. It dropped the already low rate to just 2.25%, which is a drop of 74 percentage points.

In the statement that was issued on Tuesday, the Fed said, "Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the depending of the housing contraction are likely to weigh on economic growth over the next few quarters."

While these terms may not be good to all investors, it will not be easier for property investors to purchase property here. Generally, these rate cuts are passed on to the borrower by the lenders who receive them from the Fed. This could make purchasing property in the US even more affordable than before.

Yet the Federal Reserve also made mention of the risks involved with inflation.

In their statement, they said, "Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling out of energy and other commodity prices and the easing of pressures on resource utilisation."

The inflation numbers are very troublesome for the American economy as this would stop any further rate cuts available.

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