"By my assessment, the labor market is largely in balance, the economy shows continued momentum, and inflation remains too high, the statement read in part. I view the stance of policy as only modestly restrictive. In this context, I judged it appropriate to maintain the policy rate at this week's meeting. The federal funds rate is currently at a range of 3.75% to 4%, its lowest level in three years."
"It had gone as high as 5.25% to 5.5% in July 2023, which marked the last in a long series of hikes implemented by the Fed as it tried to combat 40-year-high inflation. Since then, the Fed has left rates unchanged on several occasions. But it has also reduced them by a total of 150 bps, starting with a 50-bps cut in September 2024, followed by four more cuts of 25 bps each."
"Mortgage rates have not moved in a straight line with these policy moves. In fact, in the wake of last year's 50-bps cut, they rose from a low point of 6.25% to a peak of nearly 7.2% in January. Fears of renewed inflation emerged tied to the president's global tariff regime. But while annualized inflation has increased marginally to 3% as of September, tariffs haven't caused the prices of goods and services to skyrocket back toward their 2022 peak of 9%."
The federal funds rate stands at 3.75–4% after cuts totaling 150 basis points following a July 2023 peak of 5.25–5.5%. Mortgage rates rose after the first cut, peaking near 7.2% before gradually falling to about 6.25%. Annualized inflation rose marginally to 3% by September but remains well below the 2022 peak of about 9%; tariffs have not driven prices back to that level. Inflation has exceeded the Fed's 2% objective for over four years and is spreading across goods and services. Rising healthcare costs and insurance premiums are prominent concerns, while most measures of inflation expectations have not moved up.
Read at www.housingwire.com
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