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Hence there are two ways the government can enable struggling borrowers to meet their mortgage obligations, namely by either altering the principal balance or altering the interest rate.
Unexpected changes in the price level or nominal wages alter real interest rates, real debt burdens, and real labour costs.
Directly increasing the supply of money is a far more powerful (and dangerous) tool than altering the interest rate.
Despite the strength of the numbers, and the expectation of another positive report from Italy on Friday, economists said the European Central Bank would probably not alter its interest rate policy.
On the second day of hearings at the British Parliament related to the recent rate-rigging scandal, Marcel Rohner, the former chief executive of UBS, and a number of former heads of the firm's investment bank were questioned about whether they were aware that some 40 people had altered major benchmark interest rates for financial gain.
This is partly because, in most countries, it takes ages to get parliamentary approval for changes in taxes, so tax rates cannot be altered as fast as interest rates.
Mr. Bullard, in an conference call with reporters on Thursday, said that if any new "negative shocks" roiled the economy, the Fed should alter its position that interest rates would remain exceptionally low for "an extended period," or resume buying long-term Treasury securities to stimulate the economy.
Usually Wall Street chooses to suspend much of its activity ahead of a key economic report, which can alter the outlook for interest rates.
(Close): Stocks were slightly down with investors seeing little in the Federal Reserve's latest minutes to alter views on when interest rates might rise.
