Foster Weeks does a weekly mortgage update.
“So what’s the Fed up to? Here is the key – Tolerance vs. Patience. The Fed will not tolerate inflation above 2%…even at the expense of the economy. However, they are trying to exercise patience, as they know that it takes time for the impact of their past rate hikes to filter through the economy and fight inflation, normally between 6-9 months. So the Fed has been patient since their last hike on June 29th, waiting for inflation to decline…but inflation has been stubbornly persistent, and the patience is wearing thin on some Fed members.
The Fed’s favorite measure of inflation, the Personal Consumption Expenditure Index, hits first thing Monday, and will take special significance following this week’s action. If inflation does not begin to move lower towards the Fed’s target, expect more hikes. But this week’s tame talk on the prospects of lower inflation and slower economic growth ahead gave Bonds a boost higher, and home loan rates were unchanged to improved by .125%.”… read on.
- Foster Weeks
In a related story, MoneyNews reports:
Fed holds rates steady, maintains inflation warning
WASHINGTON (MarketWatch) — The Federal Reserve decided to remain on the sidelines Wednesday, keeping interest rates steady but leaving the door open for further increases if inflation does not behave.
The Federal Open Market Committee voted to hold overnight interest rates steady at 5.25%.
It was the third straight meeting with no change in monetary policy. It follows rate hikes at an unprecedented 17 consecutive policy-setting meetings that brought overnight rates from a decades-low of 1% to 5.25%.
The wording of the announcement from the FOMC was little changed from the September statement. The committee added a forward-looking phrase and took out language suggesting that high energy and commodity prices had the potential to add to inflationary pressures.
“Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market,” the statement said. “Going forward, the economy seems likely to expand at a moderate pace.” Read the full statement.
Read the rest of the article here.
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