Fed Meeting Minutes Release Hope Of A Stronger Economy With New Measures
The Federal Reserve’s Federal Open Market Committee released its customary after-meeting statement on Wednesday. In the context of meeting its dual mandate of stabilizing pricing and achieving maximum employment.
The FOMC statement indicated that although the economy has improved in areas including household spending and labor market conditions, the national unemployment rate remains high and the housing market recovery has slowed.
Fed Says Fiscal Policy Restraining Economic Growth
The FOMC statement said that current fiscal policy and ”retrenchment” is restraining economic growth as evidenced by failure to achieve benchmarks set by FOMC as indicators of a healthy economy. Benchmarks include a national unemployment rate no higher than 6.50 percent and achieving an inflation rate of 2.00 percent.
September’s unemployment rate was 7.20 percent and inflation has run consistently below the FOMC objective. Not to be confused with the FOMC statement’s references to monetary policy, the term fiscal policy refers to the government’s budgetary policy.
Committee Sees “Moderate“ Economic Growth, Seeks Improvement
While the Fed cited ”moderate economic growth,” the FOMC statement clearly indicated that the committee is not ready to alter its current policy of quantitative easing and estimates that it will maintain the target federal funds rate at between 0.00 percent and 0.250 percent for a considerable time after the QE bond-buying program is phased out.
The Federal Reserve currently purchases $40 billion per month in mortgage-backed securities and $45 billion in Treasury securities as part of its QE program. The Fed will also continue its existing policy of reinvesting principal payments it receives on holdings of agency debt and MBS, as well as selling maturing Treasury securities at auction.
These activities are part of FOMC’s strategy for supporting low mortgage rates and mortgage markets while making ”broader financial conditions more accommodative.” The Fed expects these measures to assist with a stronger economic recovery and stabilizing inflation at the Fed’s target rate.
Fed To Continue Monitoring Economic, Financial Developments
FOMC reasserted its position that any decision to alter current QE policy is not solely subject to economic benchmarks, but will be based on the Committee’s close review of labor market conditions, inflation pressures, and financial developments.
FOMC commented in its statement that it will continue to review economic and financial conditions in the “coming months” and will decide when to taper its monthly asset purchase according to what is learned.
This suggests that changes to the present QE policy are not anticipated for several months, and that the effects of QE combined with dampened speculation may help with keeping mortgage rates lower.
With the economic downturn, anyone dealing in real estate quickly became familiar with previously little-known terms such as foreclosure and short sale. Now that the housing market is picking back up and people are moving on, a new term is coming to light — zombie titles.
Pending home sales fell in September by -5.60 percent, and were 1.20 percent lower year-over-year. This is the first time in more than two years that pending home sales have fallen below year-earlier readings. September’s reading was below August’s reading of -1.60 percent.
Federal government agencies issued reports that were delayed by the government shutdown; and Freddie Mac reported that average mortgage rates fell for all types of loans it reports. The National Association of REALTORS issued its Existing Home Sales report on Monday. While 5.30 million home sales were expected an annual basis, September’s reading fell short at 5.29 million sales.
Barbecue season is all but over, and you won’t be spending as much time out on the deck. Don’t let it get you down, though. Spring will be here before you know it. There are a lot of things that can wear down and damage your deck, so protect your deck and make sure it stays in tip top shape over the winter.
Refinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years. While interest rates now are still low, there’s a good chance they will be heading up in the coming months.
If you are looking to buy a home, you might be wondering whether you should be looking for properties that are right in the center of the city or property in a rural area a short drive away.
Existing home sales for September fell by 1.90 percent from August’s revised reading of 5.39 million sales to 5.29 million sales. Economists had expected 5.30 million sales for September, so a slow-down in existing home sales had been anticipated.
The kids are back in school, the weather is getting cooler and your yard is covered in a layer of fallen leaves. Yep, it’s that time of the year again, but don’t think of fall leaves as a chore. They can be a useful resource for fertilizing your lawn or even decorating your home for autumn.
The National Association of Homebuilders/Wells Fargo Housing Market Index dropped two points to 55 from September’s revised reading of 57. Builder concerns over labor costs and availability and economic uncertainty related to the federal government shutdown were noted as factors contributing to the lower reading for October.