Inflation Pressures Are Easing but Rate Cut Forecast Remains Uncertain

The New Year is beginning where the old one ended -- with uncertainty about when – or whether – the Federal Reserve will begin cutting interest rates.

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The Bankruptcy Reform law enacted in 2005 made it more difficult and more expensive to seek bankruptcy protection, but it has not offset the effects of job losses, declining incomes, rising living costs, and an erosion in home equity that has eliminated a financial cushion on which many consumers had come to rely.

The implicit federal guarantee for Fannie Mae and Freddie Mac, long assumed by investors but often denied by government officials, became explicit last week, as the Treasury Department and the Federal Reserve announced separate but coordinated plans to provide financial backing for the two giant government services enterprises (GSEs).

HUD officials will proceed with plans to implement the agency’ revised RESPA rules, despite mounting pressure from industry trade groups and legislators to redraft the proposal, which HUD has withdrawn and redrafted twice before.

The law of gravity dictates that what goes up eventually comes down. The same principle applies generally to economics, but economic ups and downs tend to be both more extreme and less symmetrical than Newton’s encounter with his apple might suggest.