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FOMC Statement: Fed Holds Steady on Rates

January 28, 2016 by Emanuel Stewart

FOMC Statement Fed Holds Steady on RatesAccording to statement issued at the conclusion of today’s Federal Open Market Committee meeting, committee members decided against raising the target federal funds rate. Mixed economic conditions, slower economic growth in the 4th quarter and low inflation contributed to the decision against raising rates. The target federal funds rate was raised in December to a range of 0.25 to 1.59 percent after remaining at 0.00 to 0.25 percent for several years. While rising fed rates were expected to cause a hike in mortgage rates, mortgage rates fell after December’s rate hike.

Committee Cites Mixed Data in Decision

While labor conditions and housing markets continue to improve, FOMC members said that further improvement in labor markets and achieving the medium term goal of inflation influenced the committee’s decision not to raise rates. The Federal Reserve has a dual goal of achieving maximum employment and 2 percent inflation. While labor conditions continue to improve, the Committee wants to see further improvement. The inflation rate has stubbornly stayed below 2 percent and lower energy and non-energy import prices caused the inflation rate to fall further in recent weeks. The Fed also downgraded its reading of household spending and business investment growth from “strong” to “moderate.”

FOMC members consider global economic and financial conditions as well as trends and developing news affecting domestic economic and financial developments. Wednesday’s statement emphasized that constant monitoring and analysis of financial and economic readings are significant in monetary policy decisions. Analysts noted that recent economic developments including slowing economic growth in the US and China, along with resulting turbulence in financial markets likely contributed to the Fed’s decision not to raise the federal funds rate.

FOMC Says Policy Decisions to Remain “Accommodative”

Members of the FOMC do not expect marked economic improvement in the short term and said that they expect Fed monetary policy to remain accommodative “for some time.” This suggests that rapid rate hikes are not likely to occur in the near future; the Fed’s commitment to gradual rate increases is expected promote further improvements in labor markets and hold down borrowing rates for consumer credit and mortgages.

The Committee’s vote not to increase rates was unanimous. The next FOMC meeting is set for March 15 and 16. In the meantime, Fed Chair and FOMC Chair Janet Yellen is slated to testify before Congress about the economic outlook on February 10 and 11.

Market Outlook Tagged: Federal Open Market Committee, FOMC, Janet Yellen, Market Outlook

FOMC Statement: Fed Holds Steady on Rates

January 28, 2016 by Emanuel Stewart

FOMC Statement Fed Holds Steady on RatesAccording to statement issued at the conclusion of today’s Federal Open Market Committee meeting, committee members decided against raising the target federal funds rate. Mixed economic conditions, slower economic growth in the 4th quarter and low inflation contributed to the decision against raising rates. The target federal funds rate was raised in December to a range of 0.25 to 1.59 percent after remaining at 0.00 to 0.25 percent for several years. While rising fed rates were expected to cause a hike in mortgage rates, mortgage rates fell after December’s rate hike.

Committee Cites Mixed Data in Decision

While labor conditions and housing markets continue to improve, FOMC members said that further improvement in labor markets and achieving the medium term goal of inflation influenced the committee’s decision not to raise rates. The Federal Reserve has a dual goal of achieving maximum employment and 2 percent inflation. While labor conditions continue to improve, the Committee wants to see further improvement. The inflation rate has stubbornly stayed below 2 percent and lower energy and non-energy import prices caused the inflation rate to fall further in recent weeks. The Fed also downgraded its reading of household spending and business investment growth from “strong” to “moderate.”

FOMC members consider global economic and financial conditions as well as trends and developing news affecting domestic economic and financial developments. Wednesday’s statement emphasized that constant monitoring and analysis of financial and economic readings are significant in monetary policy decisions. Analysts noted that recent economic developments including slowing economic growth in the US and China, along with resulting turbulence in financial markets likely contributed to the Fed’s decision not to raise the federal funds rate.

FOMC Says Policy Decisions to Remain “Accommodative”

Members of the FOMC do not expect marked economic improvement in the short term and said that they expect Fed monetary policy to remain accommodative “for some time.” This suggests that rapid rate hikes are not likely to occur in the near future; the Fed’s commitment to gradual rate increases is expected promote further improvements in labor markets and hold down borrowing rates for consumer credit and mortgages.

The Committee’s vote not to increase rates was unanimous. The next FOMC meeting is set for March 15 and 16. In the meantime, Fed Chair and FOMC Chair Janet Yellen is slated to testify before Congress about the economic outlook on February 10 and 11.

Market Outlook Tagged: Federal Open Market Committee, FOMC, Janet Yellen, Market Outlook

What’s Ahead For Mortgage Rates This Week – September 21, 2015

September 21, 2015 by Emanuel Stewart

Whats Ahead For Mortgage Rates This Week September 21 2015Last week’s economic releases included several reports related to housing. The Wells Fargo/ NAHB Housing Market Index achieved its highest reading in nearly 10 years. Housing Starts dipped in August and Building Permits issued in August exceeded July expectations. The week’s big news was actually no news. The Fed’s Federal Open Market Committee decided not to raise interest rates. Fed Chair Janet Yellen followed up on the FOMC statement with a press conference and said that the Fed is not yet ready to raise rates, but that a majority of FOMC members are prepared to raise rates before year-end.

Inflation Rate Remains Well Below Fed Benchmark

The Federal Reserve has set a goal of reaching an inflation rate of 2.00 percent as one of several considerations for raising the target federal funds rate that currently stands at 0.00 percent to 0.250 percent. The Consumer Price Index for August fell from July’s reading of 0.10 percent to -0.10 percent in August. Lower prices were driven by lower fuel costs. The dip in consumer costs was the first since January.

The Core Consumer Price Index, which excludes volatile food and energy sectors, was unchanged at 0.10 percent in August, which matches analyst expectations and July’s reading.

NAHB: Home Builder Confidence Hits Highest Level in Nearly 10 Years

The Wells Fargo/NAHB Housing Market Index reached its highest reading since November 2005 with a one-point increase to a reading of 62 in September. Readings over 50 indicate that a majority of builders are confident about housing market conditions. September’s reading was the highest since November 2005, when the NAHB Housing Market Index achieved a reading of 68.

Housing Starts Lower, But Building Permits Rise

The Commerce Department reported that August housing starts fell to a seasonally-adjusted annual reading of 1.13 million starts against projections of 1.16 million starts and 1.16 million housing starts in July. Residential building permits were higher in August with a reading of 1.17 permits issued for residential construction and 1/13 million permits issued in July.

Mortgage Rates Rise

Freddie Mac reported that mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by one basis point to 3.91 percent. The average rate for a 15-year mortgage also rose by one basis point to 3.11 percent and the average rate for a 5/1 adjustable rate mortgage also rose by one basis point to 2.92 percent. Discount points averaged 0.60 got 30-year fixed rate mortgages, 0.70 percent for 15-year mortgages and 0.50 percent for a 5/1 adjustable rate mortgage.

What’s Ahead 

Next week’s scheduled economic news includes reports on new and existing home sales, FHFA’s House Price Index, along with regularly scheduled weekly reports on new jobless claims and mortgage rates.

Market Outlook Tagged: FOMC, Janet Yellen, Market Outlook, NAHB

NAHB: Builder Confidence Hits Highest Rate in 9 Years; Fed Doesn’t Raise Rates

September 18, 2015 by Emanuel Stewart

Whats AheNAHB Builder Confidence Hits Highest Rate in 9 Years Fed Doesnt Raise Ratesad For Mortgage Rates This Week September 8 2015The National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index reported that home builder confidence rose by one point to a reading of 62 for September. This was the highest reading since November 2005, when the NAHB reported a reading of 68 for home builder confidence. Any reading above 50 indicates that more builders are confident about housing market conditions than those who are not.

NAHB notes that builder confidence has been growing at a moderate pace since July 2014; this is in line with economic conditions in general. Relatively low mortgage rates and stronger labor markets are helping would-be buyers with their decisions to buy homes now.

FOMC Statement and Fed Chair Press Conference: No Rate Hikes Yet

The minutes of the Federal Open Market Committee of the Federal Reserve revealed that Fed policymakers have decided to wait on raising the target federal funds rate, which is currently set at 0.00 to 0.25 percent. While the FOMC statement indicated that policy makers acknowledge moderate progress in economic growth, a majority did not feel that the economy is ready to withstand a rate hike. When the Fed does raise rates, consumers can expect to see higher mortgage rates as well as increases in lending rates for credit cards and loans.

FOMC members said that housing markets were growing at a steady but moderate pace, but that inflation was lagging below the Fed’s benchmark 2.00 percent level due to transitory effects of lower energy and import prices. The Fed expects that inflation will reach its 2.00 percent goal over the medium term and will not likely raise rates until FOMC members are confident that inflation will rise as expected.

FOMC members continued to assert that any decision to raise rates will be based on close review of domestic and global financial and economic trends and will not be based on meeting the Fed’s dual mandate of achieving maximum employment and an inflation rate of 2.00 percent.

Committee members also said that economic conditions could continue to warrant keeping the target federal funds rate below normal levels for the longer term.

Fed Chair Janet Yellen gave a press conference after the FOMC statement concluded. She addressed questions about the Fed’s decision not to raise rates and said that concerns over global developments contributed to Fed policy makers’ decision not to raise rates. Ms. Yellen explained that a stronger U.S. dollar has caused deflationary pressures and increased competition for U.S. exports. The Fed isn’t overly concerned about global conditions at present, but changing circumstances could change the Fed’s likely intention to raise rates before year end.

Market Outlook Tagged: Federal Open Market Committee, Federal Reserve, Janet Yellen, NAHB

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