Fed’s Report pushes Mortgage Rates Lower
Posted on February 16th, 2007 by Blake Gratton under Economy & Market, Rates
The Fed Chairman Bernanke delivered the Federal Reserve’s semiannual report on monetary policy to both the House and Senate Banking Committees yesterday. What was the outcome you ask? How does this affect me and why am I even reading this ever so boring post about what some chairman has to say?
Well I’m so glad you asked! The report given is one of the most important speeches for the Charmain. The areas addressed usually have to do with the overall state of the US economy, recent developments, economic fundamentals, foreign developments, economic outlook, ranges for growth, and concluding remarks. Wow that’s a mouth full!
Bernankes testimony indicated inflationary pressures were decreasing and economic growth was improving with an easing of the housing slump. Mortgage interest rates bounced favorably to Bernanke’s remarks before Congress in which he indicated, “So far, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation.” This makes it possible for mortgage interest rates to remain low for the time being. The danger that we’re seeing is that the rates can head higher. Bernanke warned, “in the statement accompanying last month’s policy decision, the FOMC again indicated that its predominant policy concern is the risk that inflation will fail to ease as expected and that it is prepared to take action to address inflation risks if developments warrant.”
So to summarize what to grasp from the statements above, the fed is uncertain what the future holds for the economy, inflation, and interest rates. So for those of you who are looking to refinance and aren’t sure when to lock your interest rate, I would take a cautious approach and take advantage of the recent improvements in rates. If you haven’t been watching…. overall this week mortgage bond prices rose pushing rates lower!
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February 20th, 2007 at 3:07 pm
[…] In 2004, the Federal Reserve made it clear that short-term interest rates would be increased at a “measured pace” because of a fluctuating US Dollar, unstable oil prices and an evaluation of other economic indicators. In an effort to curb inflation, the Federal Reserve has kept its word and continued to raise rates, including one incredible streak of 17 consecutive hike announcements following meetings of the FOMC. The last two meetings they were able to hold off on the hikes but each meeting causes nail biting. […]