Fed & Rate Update

And then there was one.  Last week the Federal Reserve announced it was leaving the Fed Funds rate unchanged.  Not only that, the Feds stated they expect just one rate cut this year instead of the two they previously planned.  This is because while the rate of inflation is lower than it has been, it’s still higher than the Fed target.  While the Fed Funds rate does not directly correspond to mortgage rates, they generally move in the same direction.  The same day the Fed made these announcements, the consumer price index came in lower than Wall Street expectations, making Wall Street believe that the rate cut could come as soon as September.  This generally will mean a short term lowering of mortgage rates on this expectation, but could whipsaw if Wall Street starts to think the rate cut will be later than September.  This is why I don’t like to predict rates – there are too many factors involved.   

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