Today at 11:00 PST we will learn if the Fed is going to make any changes to the Fed Funds rate as they complete their two-day meeting. It is widely expected that there will be no change to the rate today. The Fed Funds rate does not directly impact mortgage rates* as mortgage rates are based on bonds (mortgage-backed securities), which move similar as stocks. Markets will be waiting for the Fed’s statement and the press conference that follows the rate decision.
As I write this, at 9:30 am Seattle time, the Dow Jones is up 40.76 at 44,673.75. Mortgage-backed securities (MBS) are down about 6 basis points.
Update 11:04 am: No surprise here. The Fed is leaving the Funds Rate unchanged. There were two dissenting members: Michelle W. Bowman and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting.
The Dow is up 22.8 at 44,657. MBS are up 6 basis points.
Next up is Jerome Powell’s press conference.
Powell states there has been no decision made on if there will be a rate cut in September at the next FOMC meeting. Odds as of today are curretnly at 45% chance of a rate cut. On Monday’s episode of my Mortgage Rate Update, odds were at 63% in favor of the Fed dropping the funds rate.
Powell also expressed the importance of keeping the FOMC neutral (not controlled by a president).
MBS are down 14 basis points and the Dow Jones closed down 171.71 at 44,461.28.
*Home equity lines of credit (and other debts) that are attached to the Prime Rate are directly impacted when the Fed adjusts the funds rate as the prime rate follows the fed funds rate.
Please leave a reply