What Did the Fed Have to Say Today?

Fed Funds Rate to Remain Unchanged

Today, for the 2nd straight meeting, the Federal Open Market Committee voted unanimously to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent.

The vote was 10-0. That’s what we like to call a “sure thing”.

In its press release, the FOMC noted that since its January 2011 meeting, the economic recovery “is on firming footing”, and that the labor markets are “improving gradually”. In addition, household spending “continues to expand”. Nonetheless, the Fed said, the economy remains constrained by rising commodity prices and the “depressed” housing sector.

The FOMC statement also re-affirms the group’s plan to keep the Fed Funds Rate near zero percent “for an extended period”, and to keep its $600 billion bond market support package — more commonly known as “QE2” — intact.

How Will the Markets React?

Well, for the third straight time, the Federal Open Market Committee’s post-meeting release statement included a paragraph detailing the Federal Reserve’s dual mandate of managing inflation levels, and fostering maximum employment. Although it acknowledged inflationary pressures on the economy, the Fed said inflation remains too low for the economy currently, and that unemployment remains “elevated”.

In time, the Fed expects both measurements to improve.

Mortgage market reaction to the FOMC has been negative since the statement’s release. Mortgage rates in Des Moines are unchanged, but poised to worsen.

The FOMC’s next scheduled meeting is a 1-day event, March 15, 2011.

If you’re in the process of buying or refinancing a house, I would love to help you lock in an interest rate. Timing is everything, and I’m certain that mortgage rates are going to be moving higher. You can either apply for a loan online or call my office at 515-257-6729. My email is also on the right hand side of this post (not posting to avoid spam-bots!).

UPDATE at 2:17pm (3/15): Mortgage markets have worsened slightly from open. Up about .125% from the “lows”. Still historically extremely low, but proving that they aren’t going to stay this low forever. If you’re still shopping, contact me.