The Fed Funds Rate

The Fed Funds Rate is currently at a range of 0-.25% (incidentally this is the first time that it’s had a range because 0% doesn’t work for trading market funds).  The Prime Rate is 3.0% above the Fed Funds Rate, always rounded up–wait, don’t get our your calculator, I’ll do that math for you: that’s 3.25% for Prime.  And there it has been there since October 2008.

A report out today by the San Francisco Fed says that their researchers indicate that investors are underestimating how quickly the Fed can raise interest rates. Once again, it’s time to get your financial house in order (including a plan to pay off credit cards once and for all) and buy a house before rates jump.  Current forecasts from the Fed predict the Fed Funds Rate to rise to 1.13% at the end of 2015 and 2.5% a year later.

I am heading to Palm Desert tomorrow for my annual nerd convention.  There are several things that always give me pause there.  The first is during the first morning’s session as I ponder “am I really running my business the best way I can?”.  The second is when I walk out of the dark and drafty convention hall to see really tan people lounging poolside and I wonder “am I really living my life the best way I can?”.  After four days of meetings I hope to have more clarity; I’ll let you know next week.