A report out of the Times Wire Service indicated that Federal Reserve Chairman Ben Bernanke was “dismayed” about reports within the financial markets that view him as ‘dovish’ on inflation and interest rates.
Bernanke had indicated in his Congressional meetings late last week that the Fed just “might be ready to pause” the series of short-term interest rate hikes that began back in June of 2004.
The markets interepreted this positively but the Fed Chairman seemed to think that the markets had misconstrued his comments regarding his stance on inflation and interest rates. Bernanke indicated to CNBC commentator Maria Bartiromo that the “economic data will dictate whether more rate hikes occur” at upcoming Federal Reserve meetings.
The possibility of even more interest rate hikes in the future is bad news for financial markets as well as consumers, especially those consumers that are carrying debt with interest rates tied to the Prime Rate such as credit card, mortgage, or home equity debt. Variable APR’s on these type of credit balances will increase with interest rate hikes, making that debt more expensive to carry.
Gas at $3/gallon and more interest rate hikes … life just keeps getting more expensive.
Advice For The Day: Pay off your credit card balances sooner rather than later and trade in that Navigator or Expedition you insist on driving around.