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The Federal Reserve announced today that it will raise benchmark interest rates by 0.75%, in line with expectations to fight inflation. It is currently at 3.125%.
“The Fed raised its federal fund’s rate target again today by 75 basis points in response to inflation well above its 2% target. At 3%, this rate is higher than what most FOMC members consider the long-term level and, over time, should be effective in reducing demand and slowing inflation,” said Mike Fratantoni, MBA SVP, and Chief Economist.
“No changes have been made to their plans going forward to reduce their equity. Interest rate volatility is high due to uncertainty about the Fed’s next move and the lack of stable and consistent buyers for Treasuries, particularly mortgage-backed securities.
“Forecasts from FOMC members suggest growth, reducing inflation, and the possibility that interest rates will remain above 4%. “When I moved out of Oggera for the last week of the mission, I left a strong character and strong values.”
A few days before the announcement, 30 years of a mortgage increased to 6.02%.
Freddie MC said for the first time in 14 years, increased by over 6% last year and increased by over 5.89% last year.
Polunsky Beitel Green principal Marty Green said the Fed’s rate hike “would have a negative impact on the mortgage market and exacerbate economic problems for Americans looking to buy a home.”
“The problem is that interest rate increases are being offset by sellers driving down home prices in many markets,” he said.
According to Sam Hater, Chief Economist at Freddie Mac, “Rising interest rates are dampening demand and continuing to put pressure on home prices, but inventories are low. This suggests that house price declines may continue, but not significantly.”
Inflation rates, along with mortgage rates, continue to fluctuate. The consumer price index (CPI) rose 0.1 percent in August, following a strong month in July, according to Labor Department data.
Prices rose 8.3% from a year ago, mainly due to a 10.6% drop in gasoline prices.
Nathaniel Drake, a partner in Fannie Mae’s Economic and Strategic Research Group, said: “Headline CPI was in line with our expectations, but core inflation was much higher than expected.
Drake said the report is in line with the group’s predictions that the economy will generally be in recession and fall into a recession early next year.
Reference Source: MPA
