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Fed Meets This Week....

By Homesmsp @HomesMSP

The Federal Open Market Committee met this week.  On Wednesday, the Fed decided to leave the benchmark interest rate unchanged - which was expected.   They also said that they were not going to make any reductions in the quantitative easing program. 

Fed members have said that economic growth has been too slow to warrant QE3's removal; and that the effects of the government's 16-day shutdown are still unknown.  The reasons they won't stop the QE3 program is that they are not 100% convinced that the economy can grow without the program, they believe low mortgage rates are important right now and the program helps to promote inflation, which could be good for the economy. The Fed made sure to mention that there is not a preset course for the future of the program and they will watch for signs from the economy that they can start to slow the program and eventually end it.

The Federal Reserve announced that it will continue to purchase $40 billion in mortgage bonds monthly and $45 billion in Treasury bonds monthly. Together, these purchases create artificial demand for bond which helps to keep prices high, and rates very low.

The Fed's statement varied little from its last meeting.  On housing, they said the sector had slowed somewhat, household spending levels have advanced somewhat.  With employment, there was further improvement, but unemployment rates are elevated.  The Fed also stated that inflation rates are running below the group's 2% target rate and continual low inflation rates could pose risks to economic performance.

What all this means to you and me is that rates will stay fairly low for the time being.  We don't know exactly what will happen, but after the meeting we did see the bond market react negatively.  If you are looking at buying a home or still thinking about refinancing, there is still time to get in on the low rates!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants - Email - Website

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