1 Down, 7 to Go in 2010
The Federal Open Market Committee ended a scheduled, 2-day meeting yesterday in Washington. It’s the first of eight scheduled meetings for the policy-setting group in 2010.
The group ended their meeting at 2:15 PM ET.
After the meeting is over, the Fed quickly issues a press release to the markets recapping its views of the country’s current economic condition, and their outlook on things.
The post-meeting statements from the Fed are generally brief but comprehensive. And Wall Street loves every word. Each piece of it is carefully dissected in the hope of gaining an investment edge over other active traders.
It’s for this reason that mortgage rates tend to be goofy on days the FOMC adjourns. It’s because Wall Street is frantically re-balancing its bets.
Yesterday was No Different
After the meeting, the FOMC said that they decided to leave the Fed Funds Rate within its target range of 0%-0.25% — the lowest it’s been in history. It’s what the Fed said on Wednesday that will matter. Not so much what it did (or didn’t) do.
After the Fed’s last meeting in December, it made several observations:
- The jobs market is getting better, or as they put it, “less worse”
- The housing sector is making some improvements
- Financial markets are slowly stabilizing further
As the Fed told us, markets are slowly improving, but there are still risks to the economy ahead. Most importantly when it comes to mortgage rates, inflation remains in check.
As compared to December’s press release, yesterday’s FOMC statement will be closely watched. If the Fed changed its verbiage in any way that alludes to strong growth and/or inflation in 2010, expect mortgage rates in Urbandale to rise as Wall Street moves its money from bonds to stocks. It’s just the way the process works.
Conversely, reference to slower growth in 2010 should lead rates lower. However, I think there are too many moving parts to comfortably predict this.
If you’re currently looking for a mortgage, contact me! We’re easy to work with. And, our rates are pretty good too!
