Conflict In Ukraine Is Having Effects Worldwide
The war in Ukraine is especially difficult and dangerous for those living in the region, but it has global consequences. In this week’s Mortgage Update, Amerifund President Jamie Cavanaugh explains how a war on the other side of the world can affect everyday people here in the US.
Hey everyone, it’s Jamie Cavanaugh here at Amerifund with your weekly mortgage update.
News from Ukraine is incredibly sad, and we want to recognize the very real human cost that they are suffering as a result of the war.
The thought of war is frightening – primarily from a personal perspective – but war also has a major effect on the economy.
During war times, most of a country’s output of goods and services pivots to whatever is needed for the war itself. For example, a factory that normally manufactures electronics might convert to an ammunition factory.
War damages infrastructure, it creates a decline in the working population, and disrupts normal economic activity. With the Russian attack compounding an already disrupted supply chain causing massive inflationary pressures, the Fed has even more reason to act and to help curb inflation.
However – the Fed has spoken in the past few days and says that they intend to only raise the federal discount rate by .25%. Many economists and investors believe that this small rate increase won’t be nearly enough to help. In turn, instead of a discount rate increase in an inflationary period relieving inflationary pressure, the chances are it will both perpetuate and exasperate.
We will likely see interest rates continue to increase in the months to come. With this volatility right now – the rate you see today may be gone tomorrow. And remember, you can’t get interest rates from yesterday. In conclusion, if you still want to take advantage of historically low rates, now is the time to act.
Thanks for watching – and tune in next week for another mortgage update!