In Janet Yellen’s last meeting as the Fed Chair, the FOMC has increased the Fed Funds rate by 0.25% to 1.50%. From the press release:

“Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”

The Fed states it’s likely there will be additional increases to the Funds Rate next year. [Read more…]

Today the FOMC increased the Fed Funds rate by a quarter point from 1 to 1.25%.  This increase to the Funds Rate was highly anticipated by the markets. As long as the economy stays on it’s current path, the Fed anticipates it will begin to gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal payments from agency debt and mortgage backed securites.  The Fed has been manipulating mortgage rates for a very long time. As they begin to pull out of mortgage markets, this will most likely cause mortgage rates to trend higher. [Read more…]