Federal Reserve Statement A Simple Explanation (June 22, 2011 Edition)

Federal Reserve Statement A Simple Explanation (June 22, 2011 Edition)

Putting the FOMC statement in plain EnglishToday- Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 10-0 — the fourth straight unanimous vote for the nation’s Central Bank.

A Slow Recovery

In its press release, the FOMC said that the economy is recovering, although “somewhat more slowly” than what was expected. Labor markets have been weaker than anticipated and the Fed believes that is, in part, a result of higher food and energy costs, and supply chain disruptions as a result of “tragic events in Japan”.

Some economic bright spots identified by the Fed include expanding household spending, and increased business investment.

These comments were in-line with what Wall Street expected from Chairman Ben Bernanke and the members of the Federal Open Market Committee.

The Fed stayed on message with respect to inflation, too. It acknowledged inflationary pressures on the economy, but attributed them to rising commodity costs and the aforementioned supply-chain disruption. The Fed expects long-term inflation to be stable.

And, lastly, the Federal Reserve re-affirmed its plan to end its $600 billion pledge to bond markets June 30, and to hold the Fed Funds Rate near zero percent “for an extended period” of time.

Again, no surprise.

The Mortgage Markets

Mortgage market reaction to the FOMC statement has been even this afternoon. Mortgage rates in Pleasanton are unchanged and leaning lower. Note that sentiment can shift quickly, however. If today’s mortgage rates fit your budget, consider locking in your rate.

The FOMC’s next scheduled meeting is August 9, 2011.

Have a Plan for your Home Purchase and Mortgage

I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. 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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