A Simple Explanation of the Federal Reserve Statement August 9 2011 Edition

By
Real Estate Agent with Ken Meade Realty serving the Sun Cities

Tuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 — the first time in 5 meetings that the nation’s Central Bank was non-unanimous and the first time since 1992 that the FOMC adjourned with as many as three dissenters.

In its press release, the FOMC had little good to say about the U.S. economy, noting that since its last meeting in July:

  1. Growth has been “considerably slower” than expected
  2. Labor market conditions have deteriorated
  3. Household spendng has “flattened”

The Fed also noted that the housing sector remains depressed.

On the positive side, the Fed said that business investment in equipment and software continues to expand, and that energy costs have dropped and no longer contribute to inflationary pressures on the economy.

In fact, the Fed worries that inflation may be running too low for the country’s good.

To that end, the Federal Reserve has pledged to keep the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013″. This is a departure from prior statements in which the Fed gave no such date.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in Arizona are improving, but note that sentiment can shift quickly — especially in a market as uncertain as this one.

If today’s mortgage rates look good in your household budget, consider locking in a rate.

The FOMC’s next scheduled meeting is September 20, 2011.

 robertesteprealtor.com l Loans and Mortgage Rates Mark Taylor

Comments (2)

Donald Reich
Prudential Centennial - New Rochelle, NY

We are in very uncertain times these days. But I think we can make an assumption that mortgage rates will stay relatively low for now

Aug 10, 2011 09:23 AM
Mark Taylor Mortgages
and for 1st Time Buyers, Move Up Buyers & Investors - Scottsdale, AZ
602-361-0707 #MarkTaylor #Awesomerates NMLS#207897

Thanks so much for the mention - love it

Aug 11, 2011 02:45 PM