A blog post on fundmasteryblog.com on how far the U.S. dollar has fallen and why, reminds me of how much the Federal Reserve must be chomping at the bit to raise interest rates.

A higher interest rate would strengthen the U.S. dollar and lower the price of oil in the United States. Think of what cheaper oil would do for the American economy!

But, alas, the Fed is trapped. The U.S. housing bust seriously undercut the integrity of the U.S. banking system and that’s where the Fed has to focus it’s attention by keeping interest rates low… for now.

As soon as the housing market and the mortgage banking market look a little less precarious (and certainly sometime after the presidential election is over), I’m sure the Federal Reserve will be under strong pressure to raise rates.

The next 6 to 9 months may end up being the sweet spot of the current housing cycle with both low prices and low interest rates.

UPDATE: Linked by Jonathan Dalton. Thanks.