Fed meeting: No rate hike this month
The results of the latest Fed meeting are in. The central bank did not raise its target for short-term interest rates at this month’s meeting, which adjourned on January 30th. The Federal Open Market Committee (FOMC), which sets its targeted short-term rates to influence inflation and economic growth, decided to leave that rate in the 2.25 to 2.5 percent range.
It appears that FOMC members don’t expect the economy to go on a tear anytime soon. That would kill the need for rate increases.
Jobs remains strong, but the pace of growth has slackened
Changes to the Fed’s statement from the previous month include this statement: “Although market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed.”
So the Board does not currently see any reason to worry about a recession, although members did note some economic slowing.
No mention of the shutdown
The Fed did not mention possible effects of a continuing shutdown on the economic future, probably because Congress and the White House have three weeks in which to compromise and prevent a continuance of the shutdown, and pass a budget.
But they do keep an eye on developments, saying, “In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective.
“This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”
Markets react, economic indicators point to rate increases
Financial markets reacted in the wake of the announcement, mostly in ways that lead to higher interest rates. Yes, rates for mortgages are not tied to the short-term rates the Fed sets.
Stock markets rose (bad for rates)Oil prices increased $1 a barrel (bad for rates)Treasury yields increased 1 basis point (1/100th of 1 percent, bad for rates)
These changes are likely to be blips on the radar. That’s because they are merely short-term reactions to the news of the day. Overall, the Fed expects little inflationary pressure and did not predict an imminent interest rate increase.
What are today’s mortgage rates?
Mortgage rates are still low, and the Fed seems committed to small, incremental increases with plenty of warning to investors and borrowers. However, mortgage rates depend on many factors not related to decisions by the Fed.
Article source: https://themortgagereports.com/47484/fed-meeting-rates-unchanged-2