Today the FOMC will wrap up their two-day meeting and announce whether or not they are going to adjust the Fed funds rate. It is widely anticipated that the Fed will not make any changes to the Fed funds rate today. Close attention will be paid to what Fed Chair Powell states after the meeting to see if he provides any indications on when the Fed will adjust the Fed funds rate.
The Fed funds rate does not directly impact mortgage rates (except for home equity lines of credit); however, it does heavily influence the direction of mortgage interest rates. This is because when the Fed moves the funds rate and commentary that is associated with this movement, it is an indicator of inflation. Mortgage interest rates are based on bonds (mortgage-backed securities or MBS) and bonds react negatively to inflation. As we continue to see inflation taming, we will see mortgage rates continue to trend lower.
As I write this post, MBS are up about 6 basis points (8:30 am).
The next Fed funds meeting will be September 17-18.
Stay tuned! We will be hearing from the Fed at 11:00 am PST.
UPDATE: As expected, the fed funds rate is unchanged. This was a unanimous decision by the FOMC.
MBS is up 5 basis points (essentially the same), ahead of the press conference.
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