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Mortgage Rates Improve After Fed Announcement

Mortgage rates improved today following the Federal Reserve’s policy announcement and Fed Chair Powell’s press conference.  The Fed doesn’t set mortgage rates (their policy rate applies to 1-day loans between banks whereas mortgages obviously last a lot longer).  But the Fed’s monetary policy stance can definitely cause volatility in the broader bond market (which DOES impact mortgages).  That was the case today and the impact was positive.  
Markets correctly assumed that the Fed would neither hike nor cut its policy rate.  That wasn’t the source of inspiration.  Rather, it was comments from Fed Chair Powell during his press conference.  Simply put, the Fed is prepared to keep rates lower for longer in an attempt to keep inflation slightly higher than they ultimately want it to be.  Their reasoning is that this is healthier for the economy in the longer-run because inflation had been operating well under the Fed’s target for so long after the Financial Crisis.  

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Source: mortgagenewsdaily.comNew feed

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