The Fed's Anti-Inflation Policy is Exacerbating the Housing Market

Political Blogger Bill King explains it this way. "The Fed's only have a couple of tools. One is to raise interest rates to slow down inflation. In some parts of the economy it works - and in other parts it works in the opposite direction. The place that it's really affecting dramatically is the cost of housing!"

King says they should set housing interest rates separately. "They could say, 'We're going to expand  Ginnie Mae, and Freddie Mac and Veterans Benefits. And we're going to set that rate intentionally low!' "

Federal Reserve Raising Interest Rates to a 16-Year High!

The Feds raising interest rates is a tool to curb inflation but, "Interest rates effect the cost of housing much more dramatically than other goods and services. For most people to own a home, they've got to finance it!"

King says it's really difficult to bring inflation to heel if housing costs are soaring, as they have in the last several years. Inflation rises when too many buyers are bidding for more than the economy is producing. It is also hurting potential first time homebuyers' chances of getting into a home.

The cost of housing makes up over 40% of the calculation the Fed uses to measure inflation.

photo: Getty