The Federal Reserve held their meeting this week. As expected they left the federal funds rate alone. But the big news was in the comments after the meeting.
The Fed held the federal funds rates at 3.5-3.75%, reinforcing its cautious approach before making its next move. The decision was tied to elevated inflation, higher energy prices and uncertainty in the Middle East. All of these continue to cloud the economic outlook.
Kevin Warsh is one step closer to confirmation as Powell’s successor as Fed Chair. His nomination still needs to be confirmed by the Senate but it is expected to be approved. Markets are watching to see whether Warsh’s leadership could bring a more rate cut friendly tone than Powell’s cautious approach. Powell did indicate that he will remain on the Federal Reserve Board after his term ends. He will serve as a governor, adding another factor for markets to watch during the leadership transition.
The Fed did hint that a rate cut could still come later this year but timing will depend on inflation, labor data, energy prices and broader economic uncertainty.
The immediate reaction was not favorable to interest rates, part of it was due to the comments from the Fed meeting, the other part was due to more news from the Middle East and concern over the delay in opening the Strait.
For now, interest rates are better than they were a year ago, but not as good as they were earlier this year. And unfortunately, no one knows for sure when rates may come down more. Remember you can always refinance if you buy now and rates do drop.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
