The Fed’s Statement And What It Means For Mortgage Rates (March 15, 2011)

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Today, for the second straight meeting, the Federal Open Market Committee voted unanimously to leave the Fed Funds Rate unchanged within its target range of 0.000-0.250 percent.

The vote was 10-0.

"Firmer Footing" For Economy

In its press release, the FOMC noted that since its January 2011 meeting, the economic recovery "is on firmer footing", and that the labor markets are "improving gradually". In addition, household spending "continues to expand".

Nonetheless, the Fed said, the economy remains constrained by rising commodity prices and the "depressed" housing sector.

The FOMC statement also re-affirms the group's plan to keep the Fed Funds Rate near zero percent "for an extended period", and to keep its $600 billion bond market support package -- more commonly called "QE2" -- intact.

Fed Acknowledges Inflation; Mortgage Rates Rise

And, lastly, for the third straight time, the Federal Open Market Committee's post-meeting release statement included a paragraph detailing the Federal Reserve's dual mandate of managing inflation levels, and fostering maximum employment. Although it acknowledged inflationary pressures on the economy, the Fed said inflation remains too low for the economy currently, and that unemployment remains "elevated".

In time, the Fed expects both measurements to improve.

Mortgage market reaction to the FOMC has been negative since the statement's release. Mortgage rates are unchanged, but poised to worsen.

The FOMC's next scheduled meeting is a 2-day event, April 26-27, 2011.

Very Last Chance To Refinance?

Inflation is the enemy of mortgage rates and the Fed's statement pressures mortgage rates to rise. If you've been watching mortgage rates this week and hope they'll further, it's not very likely. Get locked in now.

Talk to your loan officer about a rate quote, orwith some bullet points on your situation. I can send you pricing. I love to work with my readers.

(Post adapted from Bring the Blog)