Fed Raises Short-Term Rates: What this Means for You
This week saw two impactful economic news stories: the Fed meeting and rate increase on Wednesday and the analysis of the inflation data that was released on Friday. Mortgage rates reacted favorably overall and finished the week down slightly.
The 25bp rise in the overnight Federal funds rate was expected and many analysts considered the hike to be already baked into the markets. More impactful on the mortgage market were Fed Chairman Powell's comments that many interpreted to be a positive harbinger for the bond market. As we all know, increased inflation can have a negative effect on mortgage rates, and Powell suggested that there are few signs of significant growth in inflationary metrics. Following the rise and the comments, analysts were unchanged in their expectation for a further rate hike following December's Fed meeting.
Friday's economic data and analysis offered some positive takeaway's for the overall mortgage rate environment. August's core PCE, excluding food and energy, showed a 2% increase over the same period last year, and maintained the same growth rate we experienced in July. The Fed has consistently voiced their comfort with 2% growth and as long as inflationary metrics measures remain within this target growth level we don't anticipate any changes to Fed policy.
We have a busy week of economic news to look forward to on the Street. On Monday the ISM manufacturing index levels will be released followed by the national services index which comes out on Wednesday. Key employment data will be released this coming Friday. Look for movement in wage inflation rates as a harbinger for changes in the already high consumer confidence levels. Job numbers and the overall rate of unemployment are not expected to show a significant change from July's numbers.
Call Core Mortgage FInancial today at 239-514-2674 to discuss your home loan needs.