The Fed’s Official Statement And What It Means To The Mortgage Market (September 21 2010)

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Today, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged.

Fed Funds Rate Held Near 0.000%

The Fed Funds Rate remains at a historical low, within a Fed's target range of 0.000-0.250 percent.

In its press release, the FOMC said that the pace of economic recovery "has slowed" in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.

For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year's worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be "modest in the near-term".

This outlook is consistent with recent research showing that the recession is over, and that growth has resumed -- albeit at a slower pace than what was originally expected.

Fed Stays On Message; No New News On The Economy

The Fed also highlighted strengths in the economy:

1. Growth is ongoing on a national level
2. Inflation levels remain exceedingly low
3. Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period".

There were no surprises in the Fed’s statement so, as a result, the mortgage market's reaction to the release has been neutral. Mortgage rates in Ohio are thus far unchanged this afternoon.

The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.

Join The Refi Boom Before Rates Rise

Mortgage rates are holding at all-time low levels. Regardless of how long you've owned your home, you may be eligible for a refinance. Talk to your loan officer about a rate quote, orjust send me an email. I'd be happy to get you pricing right away.

(Post adapted from Bring the Blog)