Federal Reserve Statement, August 9, 2011- Markets Bounce on Feds Language

Putting the FOMC statement in plain EnglishTuesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent. No big news there.

The vote was 7-3 — the first time in 5 meetings that the nation’s Central Bank was non-unanimous and the first time since 1992 that the FOMC adjourned with as many as three dissenters.

In its press release, the FOMC had little good to say about the U.S. economy, noting that since its last meeting in July:

  1. Growth has been “considerably slower” than expected
  2. Labor market conditions have deteriorated
  3. Household spendng has “flattened”

The Fed also noted that the housing sector remains depressed.

On the positive side, the Fed said that business investment in equipment and software continues to expand, and that energy costs have dropped and no longer contribute to inflationary pressures on the economy.

In fact, the Fed worries that inflation may be running too low for the country’s good.

To that end, the Federal Reserve has pledged to keep the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013″. This is a departure from prior statements in which the Fed gave no such date.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in California are improving, but note that sentiment can shift quickly — especially in a market as uncertain as this one.

If today’s mortgage rates look good in your household budget, consider locking in a rate.

The FOMC’s next scheduled meeting is September 20, 2011.

In Tumultuous Times Have the right team in place

The market is moving at a RAPID pace…have the right team in place to help you capitalize on it. 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.

Subscribe to our daily mortgage market emails.

Have a Question?

Legal Disclaimer
Or give us a call
925-484-5363