The Federal Reserve Open Market Committee published their policy statement and announced a rate decision today – leaving the Federal Funds Rate target at 0 to 1/4 percent, and affirmed that rates will stay low for some time:
“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”
In reading the full statement (which can be found here) not much has changed, with a littany of stuck or outright gloomy economic indicators serving as cause enough for mainting low rates: High unemployment, poor household spending, depressed housing sector, tepid jobs situation, etc. etc. etc.
Regular readers in this space will know that the Fed does not set Mortgage Rates, and while it will take a few days for the Mortgage Bond Markets to assimilate this latest missive from the Fed, the initial reaction in the mortgage markets was negative, and more than a handful of lenders hiked rates by about .125% as a result. This is a little surprising given the persistently ugly economic picture – normally a recipe for low and lower rates.
What is clear is that, at least from the Fed’s point of view, the economy has a long way to go.
THAT should keep mortgage rates at relatively low levels for some time.