It’s finally here. The day we think we’ve been waiting for…the wrap up of the two day FOMC meeting where it is highly expected that Fed Chair Powell will announce that the fed funds rate will be reduced 0.25. As I write this (9:45 am Seattle time) MBS (mortgage-backed securities, which mortgage interest rates are based on) are pretty flat – up about 1 basis point. They’re flat because the markets have already priced in the quarter point rate reduction by the Fed. So if the Fed announces that there is not going to be a reduction to the funds rate or if they decide to cut 0.50 – we will see some serious market reaction.
The Dow Jones is currently up 275 at 46,033.
The big announcement is just over 3 hours away at 11:00 PST.
Stay tuned! I will be updating this post.
11:00 am: The FED dropped the funds rate by a quarter percentage point. From the press release:
“Recent indicators suggest that growth of economic activity moderated the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains elevated…. The Committee will continue reducing it’s holdings of Treasury securities and agency debt and mortgage-backed securities.”
The Dow is up 425.
MBS are currently shrugging this off as they’re up 5 basis points for the day.
11:14 am: Dow is trending lower – still up for 370 for the day. MBS are now up 18 basis points.
Next up: 11:30 PST Press Conference.
11:30 am Press Conference Notes:
Inflation has picked up. Changes to government policies continue to evolve which impacts the economy. Risk to inflation tips towards the upside and employment has shifted to the downside – a tricky position to be in.
Future rates cuts are predicted – more than previously expected.
11:58 AM PST: I am receiving an “alert to lock” from the service I use to track mortgage backed securities. MBS is now down 15 basis points as I write this.
2:00 PM: Mortgage-backed securities for the 30 year USB closed DOWN around 22 basis points today. This shows that the Fed does not directly control mortgage interest rates 🙂 and that the mortgage rates react to the Fed’s actions.
Last year, one of my clients was pondering if they should wait for lower rates or if they should buy a home. Buying a home is probably one of the largest purchases a person makes in their lifetime and it’s completely understandable how some people feel overwhelmed with the decision. 
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