Fed holds rates steady, but markets expect rate cuts next month
The Federal Open Market Committee (FOMC) meeting ended Wednesday with a no-hike decision, but that didn’t dissuade markets from believing a July rate cut is in the works.
The Fed, under recent pressure to drop rates, altered its post-meeting statement from last month’s. It now suggests the economy is not as strong as the Fed thought it was just a few weeks ago.
Mortgage rates are falling on the news. Been waiting to lock your mortgage? Today might be the day.Check rates after today's historic Fed meeting. (Jan 25th, 2020)
The Fed changes its tune
On May 1, the Fed released its post-meeting statement, which said that economic expansion was “solid” and that it would take a “patient” stance when considering future rate adjustments.
Fast forward to June, and key wording was changed.
Now, it says the economy is “rising at a moderate rate” and “uncertainties” about economic expansion have increased.
This was the hint that markets were waiting for.
Investors believe that a rate cut of 0.25-0.50% is coming during the Fed’s July 30-31 meeting.
Now, investors believe that a rate cut of 0.25-0.50% is coming during the Fed’s July 30-31 meeting. In fact, the “CME FedWatch Tool” published by CME Group shows that Federal Funds futures point to a rate cut in July.
Adding fuel to the fire, one of the 10 voting FOMC members wanted a rate cut at June’s meeting.
There was, most assuredly, a strong discussion of a rate cut soon rather than later.
As a mortgage shopper, should you wait until July?
The Fed doesn’t control mortgage rates. But it does impact the overall interest rate environment.
Even so, markets are already “pricing in” a rate cut in July. That means lower mortgage rates are available now.
If you’ve been waiting to lock in a mortgage, this could be the time. Because markets are forward-looking, July’s expected rate drops are “baked into” today’s rates.
What are today’s mortgage rates?
Mortgage rates continue downward in anticipation of big Fed moves in July.
Get a rate quote and see how much you can save on a home purchase or refinance.Verify your new rate (Jan 25th, 2020)