Fed Meeting Hint’s At Possible QE3- Interest Rates Beware

FOMC Minutes June 2011The Federal Reserve released its June 2011 Federal Open Market Committee meeting minutes Tuesday. More stimulus for the slowed economy may be on the horizon, as such, mortgage rates in California have idled in the hours since.

Fed Minutes or Fed Months…

The Fed Minutes is published 8 times annually, three weeks after each scheduled Federal Open Market Committee meeting. It’s the official log of the meeting’s conversations and debates.

The Fed Minutes is the lengthier companion piece to the FOMC’s more well-known, post-meeting press release. As compared to the brief-and-focused press release,by comparison, the Fed Minutes are long and detailed.

June’s press release was 458 words long. Its minutes totaled 6,889 words.

The June minutes reveal some interesting perspectives from within the Federal Reserve, too.

The Fed’s Discussion

  • On growth : Economic recovery had been slower than the committee expected
  • On housing : The market remains depressed. Foreclosures are “holding back” construction.
  • On rates : The Fed Funds Rate should remain low for an “extended” period

In addition, the Federal Reserve discussed whether a new round of economic stimulus was necessary. Committee members agreed that a poor outlook for employment in the medium-term would make this move more likely.

There was little that surprised Wall Street in the June Fed Minutes. This is why market reaction has been muted since its release.

The FOMC meets next August 9. If jobs data continues to weaken between now and then, expect the stimulus QE3 chatter to continue. It’s unclear, however, how this would impact mortgage rates.

Have a Plan For Your Mortgage

For now, mortgage rates remain near their all-time lows, and they have much more room to rise than to fall. QE1 and QE2 brought different directions for mortgage rates when passed. If QE3 is on the table rates will become increasingly volatile. Stimulus is inflationary and inflation is bad for mortgage rates. Look for them to jump and jump fast with increased QE3 chatter. I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process buying or refinancing a home. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize at any point in the market. Contact me below today to help you with your purchase or refinance.

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