Fed elects to hold off on interest rate hike

As expected, the Federal Reserve released its decision to hold off on any increases to the federal funds rate in July.

The Federal Open Market Committee started its July meeting on Wednesday to discuss the current state of the U.S. economy. The committee voted to keep the federal funds rate at its current range between 1% and 1.25%.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

The FOMC stated that the labor market continued strengthening and that economic activity has been rising moderately this year.

“The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further,” the committee said in its statement.

Most economists, including those at Fannie Mae, forecasted that the Fed would raise rates in June and December.

However, some believe this year has already seen the last of its interest rate increases. Financial Analyst Christopher Whalen predicted a rate hike in June, but he added that it might be the last one for a while since FOMC members are beginning to see the U.S. economy slow down.

Last year, Jason Obradovich, New American Funding executive vice president of capital markets, explained that for all its intentions, the Fed probably won’t be raising rates as much as it would like in 2017.

However, while the Fed failed to meet its goals for interest rate hikes in previous years, this year proved different.

In June, the Fed voted to raise interest rates for the second time this year. The first rate hike occurred in its March meeting.

And later, FOMC minutes showed raising the federal funds rate isn’t the only thing on the committee’s agenda. Members brought up the balance sheet in the meeting, saying they may begin to shrink it this year.

 

Posted on housingwire.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s