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The Federal Open Market Committee of the Federal Reserve (FOMC) stated after its meeting that the Federal Reserve could increase its benchmark rate range twice throughout 2023. There are no rate changes expected during 2022 as the economy continues to rebound from the ongoing health crisis. The current interest rate range is 0.00% to 0.2%.
While FOMC committee members adjusted their forecast for increasing the Fed’s benchmark rate range, they didn’t predict inflation over the long run. Rather, they labeled the current upward inflation trend as “transitory.”
The Consumer Price Index (CPI) showed that the cost of living increased in May and triggered inflationary growth to a 13-year high of 5%.
Over half of the FOMC members anticipate at least two more rate increases in 2023. Former Treasury Secretary Larry Summers said that the Fed should reconsider its monetary policies based on the stimulus payments given to Americans.
The Fed has maintained its benchmark interest rate range to 0.00% to 0.25% and continued its monthly purchases of $80 billion in Treasurys and $40 billion in Mortgage-Backed Securities to help support the economy and financial markets.
The FOMC committee will keep an ear out for economic news to determine changes in monetary policy.
Federal Reserve Chair Jerome Powell stated that members discussed potentially tapering the Fed’s bond purchases. while the Fed has said that it wants to see significant progress in the economy prior to tapering its bond purchases, analysts anticipate further discussion of such activity in FOMC’s upcoming July meeting. Cutting back on bond purchases is considered the first step in handling the Fed’s accommodative position on monetary policy.
Chair Powell said that the FOMC will continue working on monetary policy considering the FOMC’s mandate of both achieving maximum and an annual inflation rate of 2% over the long haul. Inflation had been under 2% for a while prior to the pandemic; so a current rate of inflation of more than 2% would help increase the average inflation rate to the 2% requirement
The unemployment rate is getting better as businesses and other employers bring service back up to full capacity. That said, Chair Powell warned that the economy is still strongly connected to how the virus progresses and said that monetary policy would be modified based on how the pandemic affects the economy.
The Federal Reserve has decided to leave interest rates near zero as the economy continues to struggle to recover. The near future is still uncertain given the times we are currently in.
That said, mortgage interest rates also continue to be extremely low and have hit all-time lows a handful of times over recent weeks. This, as well as the easing of restrictions, is prompting the housing market across the nation to bounce back as buyers come out of the woodworks and take advantage of rock-bottom interest rates.
Now may be a very good time to take advantage of still historically low mortgage interest rates before they rise. If you have specific questions on purchasing or refinancing your home mortgage loan and how these changes may affect you, please contact your trusted mortgage professional today.
Do you have questions about mortgages? Are you considering applying for one soon? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington serving the entire state, as well as Oregon, Idaho, and Colorado and have been in the business since 1992. Our experts are on stand-by ready to work with you to help you choose which one of our mortgage programs is best for you. Contact us today with any questions you have about mortgages.