If you believe that the US Dollar is a strong currency, then you are sure to be on the edge of a bearish outlook if the Federal Reserve raises interest rates. The US dollar has been the main financial safe haven of all time and this trend is not likely to change.
It is believed that the housing market will slow down in the United States and this will have a devastating impact on the real estate markets across the United States. The housing market is a major force behind the US economy and this will surely affect the financial condition of the country. If this occurs, the US dollar will definitely suffer a big hit.
However, there is one thing that can make the economic crisis in the country easier to deal with and that is the strength of the real estate industry. The current problems in the housing market do not have much effect on the country’s real estate sector. This is because the banks are not taking the risk of investing more money on real estate.
If the real estate bubble burst and the housing market started to crash, the whole economy would face a downfall. Therefore, it is important to note that the banking system is stable and the banks are not willing to invest too much in real estate.
This will only help the banks and other creditors as they can buy back the real estate at a cheaper rate and then resell them to the investors. In order to keep the US economy stable and afloat, the US Federal Reserve must raise interest rates for a few reasons.
Firstly, it is a positive sign for the US economy as the rates are expected to encourage more investment in the real estate sector and this is also going to push down the prices of the properties. Secondly, the US will find the need to take over more of the debt burden by issuing more money in the form of bonds and it would be a very good thing for the banks who will find it more easy to lend money to the banks than to individual borrowers.
Thirdly, these interest rates will be encouraging more fiscal consolidation by central banks all over the world and therefore the global economy will not face much of a challenge. Fourthly, it will also lead to more global trade and therefore, more exports of goods and services will come into the country and this is good for the country’s economy.
Therefore, it will be a good idea for the Federal Reserve to raise interest rates for three reasons and it will be a bad one if the real estate sector starts falling. If the US economy takes a hit, the real estate industry is the most important part of the economy and hence it would be a big negative for the country. Therefore, the US should wait until the housing market stabilizes before it makes any further moves.
It would be wise to wait for about two months before the market stabilizes because it would be very difficult for the real estate sector to recover unless the real estate values rebound very fast. Moreover, even if the property values rebounded, it would be difficult for the banks to be able to resell them as the banks would not have enough cash to do so.
Thus, the only way out for the US is to allow the real estate value to recover before it makes any further moves. However, this is not possible as it has been noted that the real estate sector has been falling for quite some time and this means that there are many people who are ready to make big losses when it comes to real estate investing.
The only way for the economy to gain from the fall in the real estate value is for the dollar price to recover. In other words, it will take a period of time before the US can make any gains on the real estate market.
Therefore, the United States economy will be able to recover from the fall in the real estate market and will recover its losses and that is what the dollar price outlook should look like if it is to stay level. Hence, the real estate market will stabilize and there is no real reason for the Federal Reserve to raise rates for a prolonged period of time.