this United States Federal ReserveThe U.S. Federal Open Market Committee (FOMC) held its sixth consecutive meeting on Wednesday to keep short-term policy rates steady at a range of 5.25% to 5.5%.
“The Committee does not anticipate lowering the target range until it is more confident that inflation will sustainably move toward 2 percent,” the FOMC said in a statement. “In addition, the Committee will continue to reduce its holdings of Treasury, agency, and institutional debt.” and agency mortgage-backed securities.”
At the March meeting, policymakers said they still expected three rate cuts in 2024.
Recent economic data does not convince the Fed that inflation will continue to decline. Strong first-quarter inflation data, coupled with a strong labor market, delayed expectations for the Federal Reserve’s first rate cut. In April, Fed Chairman Powell made it clear during a speech at a Washington forum that an interest rate cut was not imminent due to the strong economy.
Despite short-term interest rates at current levels, the economy has maintained surprising momentum. With the unemployment rate below 4%, companies are steadily adding workers, and real wage growth is evident as inflation eases. While the upward trend in inflation is noteworthy, the Fed has made considerable progress toward its 2% goal.
Since the March FOMC meeting, Freddie MacBefore the May meeting, the average 30-year fixed mortgage rate had increased from 6.74% to 7.17%. Two more inflation data are expected before the next FOMC meeting on June 12.
“While it’s possible, I don’t think we’ll see much change in mortgage rates after this Fed meeting, as the Fed has been willing to let data take the lead at this stage of the cycle.” real estate agent network Chief Economist Danielle Hale said in a statement. “To see mortgage rates fall more sharply, the Fed will need to see more evidence that inflation is slowing.”
For home buyers and sellers, this suggests housing affordability will remain a top consideration. Hale said that could drive home purchases in more affordable markets, primarily the Midwest and South.
