The FOMC released its announcement this morning at 9:30 eastern. Two very important indications of what the FOMC will do are found in the statement released to the press.

 

1. They anticipate keeping the “exceptionally low fed funds rate at least through late 2014″. (Had previously been “into late 2013″, so this is favorable to interest rates.)


2. They have announced extending their program to bolster long-term security holdings.

 

The impact to the rates was precipitous. Check out this chart to see how the bellwether 10-yr Treasury dropped 14 bps immediately after the announcement. 10 yr 14 bp drop


 

Mortgage rates continue to improve. 

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1 Comments on Immediate Reaction to Fed's FOMC Statement Drops Rates, Precipitously!

JAN
25
2012

 Here is the exact language change from MID 2013 to LATE 2014.

Bad news for the economy.  Good news for interest rates.

 

December 13th Meeting

"The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

January 25th Meeting

"The Committee expects to maintain a highly accommodative stance for monetary policy.  In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
5:10pm • #1


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Dave Woodland - Your Bend, OR Friendly, Knowledgable Mortgage Professional

Bend, OR

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Signet Mortgage

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At least weekly, I write about what is happening that may affect interest rates and mortgage-backed securities for the coming days.


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