The Federal Reserve Board decided today (Aug. 12) to keep interest rates at their current, historically low levels.
As a result, the benchmark prime interest rate is expected to remain at 4%, its lowest level since 1958.
The Fed lowered rates 0.25% during its previous meeting, on June 25, because it felt, at that time, that the economy was stagnant. But since then, evidence has emerged that consumer spending “is firming, although labor market indicators are mixed,” according to the Fed’s statement issued this afternoon.
Businesses also are unable to raise prices to boost their profits, so the Fed is not worried about the rate of inflation accelerating.
Meanwhile, the Fed is somewhat worried about the possibility of deflation, which is why it did not lower interest rates further.
Deflation is a period when prices decline over time. Although that sounds good, consumers delay purchases during periods of deflation so they could take advantage of lower prices in the future.
In fact, the Fed reported today it is more worried about deflation than it is about inflation picking-up.
Low interest rates are good for RV dealers because they keep dealer interest expenses low. Dealers also credit low interest rates with keeping the RV retail market robust, while most other segments of the travel and leisure industry are struggling.