Fed Funds Rate Expected to Remain at 5.25%

The Prime Rate follows the Fed Funds Rate.  If you have a home equity line of credit, you’d like this rate to drop.  Consensus is that the Federal Open Market Committee will not lower the Fed Funds rate in their meeting this week nor will they raise it.  Your equity line rate will remain the same according to consensus estimates.

Fed Won’t Change Rate Without Convincing Data

By John M. Berry

May 4 (Bloomberg) — Federal Reserve officials, confronted with conflicting evidence about where the U.S. economy is headed, won’t change the 5.25 percent key interest rate at their policy-making meeting next week.

The Fed board members can’t be sure that economic growth will rebound in the second half of the year, nor whether core inflation will subside gradually as they have hoped.

While the officials are less than certain about their forecast, they also have no strong reason to change it. Until convincing evidence emerges one way or the other, the overnight lending target set last June won’t budge.

Some analysts are predicting there won’t be a surge in growth — and that the Fed will lower the rate to 4.5 percent by the end of the year. That won’t happen unless it’s clear that core inflation is slowing. (more…)