What can the Federal Reserve Bank Chairman Ben Bernanke say this afternoon to help lift the stock markets The major stock indexes are already trading higher in anticipation of some positive remarks by the central bank boss. The falling U.S. Dollar Index is helping the stock market today, however, the weaker dollar is not good for the people that are using dollars to purchase goods.
In any case, the central bank is expected to leave the Fed funds rate (overnight bank lending rate) at zero percent. This is the rate that the large banks such as J.P. Morgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), and Citigroup Inc (NYSE:C) can borrow money from the Federal Reserve. It is important to note that this rate has been at zero percent since December 2008. Meanwhile, the banks charge an average rate of 16.0 percent interest on their credit cards and speculate in the stock market to increase profits. It is easy to see why people can be so angry at the large banks.
This low rate Fed funds rate is also the reason why you do not make much interest on your savings account money that you have at your bank. Basically, this extremely low Fed funds rate punishes the person who saves money. Artificially low interest rates force investors to seek yield by speculating in the stock and commodities markets. The people who are ultimately adversely affected are the retirees that are on a fixed income, this certainly hurts those who are too old to take on risk. Oh well, this is just one of the reasons why all eyes will be on the Bernank this afternoon.
Nicholas Santiago
InTheMoneyStocks.com