Federal Reserve Discusses Interest Rates, Mortgage Defaults

Policy-makers in the Federal Reserve sat down this afternoon to begin a two-day summit to discuss a possible change in US interest rates, among other financial trends.

One subject that looks to be high on the list is the radically rising rate of mortgage defaults among American homeowners. Rising mortgage rates coupled with falling homeprices have meant that many homeowners that otherwise could have avoided default by refinancing, could not. These disturbing trends will surely weigh heavy on the minds of members of the Federal Open Market Committee as the weigh the Fed's options.

Most leading economists predict that a shift in the interest rate is unlikely - which would make it the sixth session in a row that the rate remained at 5.25%. However, the rising default rate, on top of a slower economy, could raise discussion of cutting rates in the future.

The Fed will announce its decision mid-afternoon tomorrow.

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