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The Federal Open Market Committee starts a 2-day meeting today, one of 8 scheduled meetings this year.

The FOMC is the policy-making arm of the Federal Reserve.  It's  most commonly known for its role in setting the Fed Funds Rate.  When the economy needs a jump-start, the FOMC often lowers the Fed Funds Rate to make borrowing less expensive for both businesses and consumers.

Conversely, when the economy is going gang-busters, the FOMC tends to raise the Fed Funds Rate to slow things down.

Currently, the Fed Funds Rate is in a "target range" of 0.000-0.250 percent -- the lowest it's been history.  It's a stimulative position for the economy and markets don't expect the rate to change. Based on trading in Fed Funds Futures, Wall Street predicts with 100% certainty that the Federal Open Market Committee will vote to leave the Fed Funds Rate unchanged.

However, just because the Fed Funds Rate will be staying as-is doesn't mean that mortgage rates will, too.

Mortgage rates are not controlled by the Federal Reserve.  They are "made" in the mortgage-backed securities market and MBS is highly responsive to changes in the U.S. economic outlook.

It's in this fashion that the Federal Reserve can influence mortgage rates.

The FOMC's post-meeting press releases address the economy, its strengths and its weaknesses.  It's also not uncommon for the Fed to offer a brief outlook for the next few quarters.  As home buyers and would-be rate shoppers, you can't underestimate the power of these worms words.

The Fed's press release will likely address the recent relative strength of housing, employment, and sales data.  If the Fed concludes that recent data foreshadows the end of a recession, look for stock markets to take off and bond markets to sink.  Furthermore, expect a return of the inflationary talk that tends to kick mortgage rates in the gut.

Inflation is the enemy of mortgage rates.

On the other hand, if the Fed's press release says that economy should remain weak through 2009 and into the start of 2010, well, that's kind of what Wall Street is expecting.  Mortgage rates would likely dip some, in this instance, but not by much.

In other words, mortgage rates may fall when the Federal Open Market Committee adjourns tomorrow, but the amount by which they could fall is much less than the amount by which they could rise.  The safe bet, therefore, may be to lock your mortgage rate in advance of the FOMC's 2:15 PM ET adjournment.

If you're not already working with a loan officer and want to get your mortgage rate locked quickly, call or and we'll take your mortgage application for you right away.  With the good chance that rates could rise again Wednesday, you might not want to gamble on waiting for a lower rate.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.