By DESMOND LACHMAN
In March 2008, then Federal Reserve Chairman Ben Bernanke assured us that the sub-prime loan and housing market problems were not of systemic concern to the financial sector. Yet, in September 2008 Lehman Brothers failed in large part because of its leveraged exposure to subprime and housing market lending. Lehman’s failure in turn triggered a U.S. and world financial crisis that resulted in the 2008-2009 Great Economic Recession.
Fast forward to today. Last Sunday, Fed Chair Jerome Powell gave a television interview to 60 Minutes on the monetary policy challenges that lay ahead. In that interview, he went out of his way to provide assurances similar to those of Ben Bernanke in 2008 about the stability of…
By PATRICK LAVERY
Saying the economy has surprised even the experts since the start of the COVID-19 pandemic nearly four years ago, Federal Reserve Board Chairman Jerome Powell on Wednesday announced that the Fed would hold its ground for now and keep its policy interest rate unchanged at its current range of 5.25% to 5.5%.
“We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in prepared remarks following the first two-day Federal Open Market Committee meeting of 2024.
The decision by the FOMC was not unexpected, and…
By PATRICK LAVERY
Seven weeks ago, the 2023 slate of policy meetings for the Federal Open Market Committee concluded with members voting to leave the key interest rate unchanged for a third straight time. However, anyone hoping that 2024 will begin with some movement in a downward direction is likely to be disappointed this week.
Despite a seemingly positive economic outlook that has the stock market soaring to record highs, the experts seem to agree that there will be no change made when Federal Reserve Board Chairman Jerome Powell emerges from the FOMC meeting on Wednesday.
The stability, so to speak, of the Fed’s policy interest rate has been mirrored somewhat in the housing market recently. According to Freddie Mac,…
By PATRICK LAVERY
Saying he and the Federal Open Market Committee were “proceeding carefully,” Federal Reserve Board Chairman Jerome Powell announced that they voted unanimously Wednesday to leave its policy interest rate unchanged for a third straight meeting.
This ensures that after more than a year of incremental hikes that eventually saw the key rate spike 5 1/4 percentage points dating back to the beginning of 2022, the target range will, for now, remain at 5.25% to 5.5%.
Most experts do not expect the FOMC to start bringing the rate back down again until the third quarter of 2024, owing that to Powell and the Fed’s continuing mandate to bring inflation down to 2%.
Total Personal Consumption Expenditures prices rose…
By PATRICK LAVERY
Americans were just putting away their families’ Halloween costumes the last time the Federal Reserve Board made an announcement on monetary policy, holding the federal funds rate at a range of 5.25% to 5.5%. Now the nation is well past Thanksgiving and fully focusing on the holiday season and the new year ahead.
But even as the seasons change, most experts expect the Fed to once again refrain from taking any action at this week’s Federal Open Market Committee meeting, slowing a trend of 11 rate hikes since early 2022.
The CME Group’s FedWatch, a forecast of interest rates based on Fed funds futures trading indicators, currently hedges a 98.4% chance that the FOMC will vote to…
The labor market experienced unexpected gains last month, with nonfarm payrolls rising 199,000, adding to a 150,000 bump in October. Unemployment fell to 2.7%, workforce participation increased, and monthly wage growth saw their biggest boost of the year.
This paints a difficult picture for the Fed moving into its FOMC meeting, scheduled for this week.
The Central Bank prefers a slower hiring pace to help it combat inflation. Its rate hikes have moved the economy closer to its 2% inflation target, down from 9.1% in June 2022 to 3.2% last month.
Investors are hoping for cuts to federal funds rate sooner rather than later but November’s employment gains give the Federal Reserve more reason to hold interest rates at their…
Mortgage applications increased again last week as cooling inflation and Fed rate expectations pushed mortgage rates down.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 2.8%, up from the week prior’s modest +0.3%.
Adjusted purchase applications fell by 0.3%, while the unadjusted index rose 35% from the week before and was 17% lower YOY.
Falling rates drove the jump, with the 30-year fixed-rate falling to 7.17%, its lowest since August 2023.
MBA Vice President and Deputy Chief Economist Joel Kan pinned the rate cooldown on disinflation and the dwindling possibility of further Fed rate hikes.
The FOMC will meet on December 12-13 and Wall Street…
Borrowers struggling with rampant unaffordability are seeing some relief as mortgage rates cool, ending an upward swing.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.76%, down from 7.79%. A year ago at this time, the 30-year FRM averaged 6.95%.
The 15-year fixed rate remained unchanged at 7.03%. A year ago, it averaged 6.29%.
“The 30-year fixed-rate mortgage paused its multi-week climb but continues to hover under 8%,” said Sam Khater, Freddie Mac’s Chief Economist.
“The Federal Reserve again decided not to raise interest rates but have not ruled out a hike before year-end. Coupled with geopolitical uncertainty, this ambiguity around monetary policy will likely have an impact on the overall economic landscape and may continue…
By PATRICK LAVERY
As experts almost unanimously predicted, the Federal Reserve Board on Wednesday held its target range for the federal funds rate at 5.25% to 5.5%, meaning after a year and a half of upheaval, the range will approach the end of 2023 not having budged for more than a third of this year, from the last rate hike at the end of July until at least the Federal Open Market Committee’s next meeting two weeks before Christmas.
That may belie the fact that the Fed has raised the rate a total of 5 1/4 percentage points since early 2022, but for now, the stability is welcome news – at least in the housing market.
“Mortgage rates fell this…
By PATRICK LAVERY
When the Federal Open Market Committee meets this week analysts will be looking for signs of what’s next and it may be anyone’s guess.
At the Mortgage Bankers Association’s annual convention and expo in Philadelphia this month, MBA Chief Economist Michael Fratantoni told attendees that they expect the Feds will maintain the federal funds rate target range and do not expect an increase from them again this year.
Fratantoni projected there will be at least two cuts in 2024, and possibly more in 2025. But then Patrick Harker, the president and CEO of the Federal Reserve Bank of Philadelphia, took the stage the next day and said rates may have to stay high in order for them…
