The Federal Reserve not too long ago introduced that they might be slicing rates of interest. In the present day we will likely be discussing what which means for municipal securities.
The Federal Reserve, additionally known as the Fed, is the central financial institution for america of America and are tasked with primarily setting financial insurance policies to keep up a steady financial system. This contains setting the federal funds price, which is the rate of interest that banks cost one another for in a single day borrowing of cash.
When the Fed broadcasts will increase or decreases in rates of interest, it drives the market demand for municipal securities, similar to common obligation bonds, issued by California college and group faculty districts. The change in demand by traders results in totally different general borrowing prices for municipal securities issued by California college and group faculty districts. Elevated demand results in decrease rates of interest and decrease general borrowing prices and decreased demand results in greater rates of interest and better general borrowing prices. Moreover, a discount in rates of interest can result in refinancing alternatives of current municipal securities that may result in taxpayer financial savings for a California college or group faculty district.
