Daily Kos: Why the Fed does what it does

by PsiFighter37

Thu Jun 29, 2006 at 05:34:43 PM PDT

(cross-posted at Deny My Freedom)

Today, the Federal Open Market Committee (FOMC) raised the federal funds rate 25 basis points to 5.25%. It was the 17th consecutive time that the FOMC raised the key short-term rate, but it seems that the American public had already had enough of the rising interest rates.

By a 65 percent to 22 percent margin, Americans oppose another rate increase by the central bank, which says such moves are necessary to counter inflation. The poll was conducted from June 24 to June 27, ending two days before the Fed's latest rate decision, to be announced 2:15 p.m. today in Washington.

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It makes sense that the average American would be against rising interest rates - it makes it more expensive for consumers to borrow money, and it makes mortgages on homes more expensive. Hell, even investors don't like rising interest rates - higher rates make investment more expensive for firms, and it tends to have slow down the economy in general, especially the housing market.