The Federal Reserve Board decided today (March 20) to lower interest rates 1/2%, which means major banks, most likely, will lower their benchmark prime rate to 8%, its lowest level since the summer of 1999.
RV industry insiders generally believe lower interests will provide only a marginal benefit prior to the beginning of the industry’s model year 2002 in July. Until then, the relatively low-level of consumer confidence will hold-down retail sales, according to industry sources.
In its statement issued today, the Fed wrote that it also is worried about consumer confidence. “The potential for weakness in global economic conditions suggest substantial risks that demand and production could remain soft. In these circumstances, when the economic situation could be evolving rapidly, the Federal Reserve will need to monitor developments closely.”
The Fed began raising interest rates during the summer of 1999 because it was worried, at that time, that the economy was growing too rapidly and that the rate of inflation could accelerate.
However, the Fed changed its view in early January after it became evident that the economy was slowing down dramatically.
In its statement today, the Fed said, once again, that it is more worried about the possibility of a recession, than about higher rates of inflation.
The next meeting of the Fed’s Open Market Committee, which sets interest rates, is scheduled for May 15.