The Federal Open Market Committee meeting was held this week and as expected, they left interest rates alone.
In the FOMC statement, they said the economy is recovering, but slower than expected. The Labor markets have been weaker and the Fed believes that is partially due to higher food and energy costs. Some economic improvements were increased household spending and business investments.
The FOMC also kept their same message regarding inflation. They acknowledge that there have been inflationary pressures, but that they are related to rising food and energy costs. They also feel that the supply chain disruption from Japan's tragic events have played a role in the inflation numbers. They do expect long term inflation to be stable.
The statement released also stated that the Fed planned to end it's quantitative easing plan (QE2) where they had been spending up to $600 billion in the bond markets. This program was expected to end June 30th. They also plan to keep interest rates at low levels for an extended period of time.
There weren't any surprises in the Fed's statement.
What all this means to us is that rates should stay low for awhile - but we never know exactly how long and something can happen quickly in the market to change that. None of us expected rates to be where they are now after the last couple of years. In December rates started to increase and then last month started dropping again. If you are thinking about buying or refinancing your home, rates may be at or near the bottom (again!). We never know if we have hit the bottom until rates start to increase. With home prices as low as they are and interest rates near the bottom, it is a fantastic time to buy a home!!
