I wrote this article for a local publication that many found useful:

Why Mortgage Rates Don't Go Down? How the Federal Reserve is connected to Mortgage Rates   

Mortgage Rates - Determined by 10yr Treasury bond...

Fixed Mortgage rates follow the direction of the 10 year Treasury bond.  If the 10 year bond goes up, then fixed mortgage rates will also go up, and vice-versa if it goes down.

The Federal Reserve Only Controls Prime Rate...

The Federal Reserve has the power to raise or lower the overnight lending rates between banks, often referred to as the "Prime Rate".  Typically any changes are announced during one of their regularly scheduled monthly meetings.  Changes to the Prime Rate directly affect interest rates for credit cards, car loans, home equity lines of credit (HELOCs), and various short term loans.  The Federal Reserve does not control long term mortgage rates, like the 15 and 30 year fixed.

Prime Rate and Mortgage Rates are like distant cousins, not brothers...

The Prime Rate and Mortgage Rates are related but not directly.  Changes in the Prime Rate have an indirect affect on mortgage rates.  But changes in the Prime Rate are not proportionate to changes in mortgage rates. That is to say, if the Prime Rate goes down .5%, mortgage rates do not automatically go down .5%.  If mortgage rates go down it is usually to a much lesser degree than the Prime Rate.

Another key reason that changes in the Prime Rate may have little or no effect on mortgage rates is that the Prime Rate is a short term variable rate that frequently adjust in response to market conditions.  When the bank lends money based on the Prime Rate, they have little fear of losing profits should the market change unfavorably.  Whereas, fixed mortgage rates do not change, and so the banks are locked in for 15 to 30 years at a time, regardless of future market conditions.  Inflation is the main culprit that deteriorates bank profits of fixed rate loans. Therefore banks are more cautious when lowering fixed mortgage rates when inflation is a risk. 

Predicting the Future -

The instantaneous availability of data has changed the speed at which the market responds to economic reports and other information affecting the economy.  The Federal Reserve uses data from various economic reports to decide whether a change in the Prime Rate is needed to boost the economy.  This same data is available to everyone.  As a result, the stock market analysts use this data to try and predict how the Federal Reserve is going to act.  In the weeks prior to a meeting, financial analyst are polled about whether they think the Federal Reserve will lower the Prime Rate at their next meeting, and by how much.  If the poll reflects a high likelihood of a change (up or down), then the market will often react to this prediction.  The market is in fact, adjusting the mortgage rates before the Feds even meet.  If the forecast turns out to be correct, then mortgage rates will not change the day of the actual meeting.  If not correct, the rates will re-adjust to the appropriate level.