By CHUCK GREEN
Mortgage rates are hovering around 7% as the summer winds down and with potential homebuyers facing high monthly payments for the few properties for sale, people are wondering when the Federal Reserve will loosen its grip on monetary policy so the housing market can free up again.
Last month, Chairman Jerome Powell announced the key interest rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press. Powell said that they don’t expect to reach their goal of 2% inflation until 2025, and they do not intend to cut rates until next year.
“The Fed’s rate hikes attempt to combat inflation, increasing mortgage interest…
By DESMOND LACHMAN
There is good news and bad news for the U.S. housing market. The good news is that by this time next year, mortgage rates will be substantially lower than they are today. The bad news is that by this time next year, the U.S. is more than likely to be in a meaningful economic recession.
The main reason for believing that next year we will have both lower interest rates and a recession is that the Fed is currently engaged in monetary policy overkill and that monetary policy operates with long and variable lags. Those lags are thought to be between 12 and 18 months. That means the economy, which is already showing clear signs of slowing,…
By PATRICK LAVERY
Six weeks ago, Federal Reserve Chairman Jerome Powell hinted that although the Fed was, at the time, pausing increases to its target range for the federal funds rate, the rate might be raised again several more times before the end of 2023.
Those waiting to find out if that was a threat or a promise got their swift answer on Wednesday, as Powell announced after the two-day Federal Open Market Committee meeting that the rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press.
Since early 2022, the key rate has risen 5 1/4 percentage points.
“We have covered a lot of ground,…
By PATRICK LAVERY
When last we heard from the Federal Reserve on interest rates, on June 14, the Federal Open Market Committee agreed not to raise the target range for the federal funds rate for the first time in more than a year.
With the Fed’s next meeting now less than a week away, could Chairman Jerome Powell be preparing to announce one of the hikes that he said in June might still be remaining for this year? Or will the FOMC stick to a holding pattern?
And how are those developments going to impact a U.S. housing market that Powell has continuously characterized as sluggish throughout 2023?
It is predicted that the central bank will deliver a quarter of…
By PATRICK LAVERY
The Federal Open Market Committee called a pause on their rate hikes Wednesday, electing to keep the target range for the federal funds rate unchanged at 5% to 5.25% while continuing to significantly reduce securities holdings.
It was not a complete victory lap for Federal Reserve Chairman Jerome Powell, who told reporters at a press conference that the FOMC overwhelmingly expects to raise interest rates “somewhat further” before the end of 2023.
The reason for the future uncertainty in interest rates continues to be inflation, which is still “well above” the Fed’s longer-run 2% goal, according to Powell. The Summary of Economic Projections released concurrently with Wednesday’s announcement kept that 2% target destined for 2025.
A survey…
By KIMBERLEY HAAS
Industry leaders are speculating about what officials at the Federal Reserve will do concerning rate increases during their meeting this week.
In May, Federal Reserve Chair Jerome Powell said they were prepared to raise rates again if economic conditions worsened, but hinted at a wait-and-see attitude regarding this month’s meeting. Policymakers may even skip raising rates after a smaller than expected rise in the Consumer Price Index, released on Tuesday.
CNN reporter Matt Egan said the CPI report gives officials the cover they need to hold off on increasing rates this month.
“Investors are becoming increasingly confident that the Fed is going to keep interest rates steady after … 10 consecutive interest rate hikes. The Fed has…
The Federal Open Market Committee’s June meeting is just around the corner, and while most experts think the Fed will pause its rate increases, others are wary.
Most analysts expect the Central Bank not to introduce another rate hike at the meeting, scheduled for June 13-14, according to a poll of economists from Reuters. More than 90% of those polled, 78 of 86 total, don’t think another hike is on the horizon. These analysts think the Fed will pause to evaluate the impact of the 500 bps increases they’ve already instituted.
“[Fed Chairman Jerome Powell] expressed his bias in favor of remaining on hold in June … he’s going to stick with that as it gives them an additional month…
By KURT DAVIS JR.
There are some simple life lessons in business: It is hard to be liked by all people and it is hard to be liked all the time.
Leaders at central banks and investment firms know this very well… today’s economic crisis will likely end with a simple reminder.
The Federal Reserve: Essential to Society or The Source of the Problem?
There are few, if any, central bankers who are not taking some public criticism today for raising rates.
For Jerome Powell, chairman of the Federal Reserve, and the other Fed members, their position cannot be enviable: stop inflation and maintain financial stability.
It is always a tough assignment to raise interest rates (the usual dose of…
By PATRICK LAVERY
Incremental but persistent increases in the Federal Open Market Committee’s policy interest rate have now officially entered a second year, with Federal Reserve Chair Jerome Powell announcing another quarter-percentage point hike on Wednesday.
The target rate is now 5.25%, up five full points since April 2022. Powell reiterated in his prepared remarks that the Fed’s objective is returning inflation to 2%, its historic target.
Unfortunately, Powell acknowledged, interest rates remain stubbornly high. Powell said that for the 12 months ending with this past March, total Personal Consumption Expenditures prices rose 4.2%, excluding food and energy prices which tend to be more volatile, while core PCE prices were up 4.6%.
“Inflation has moderated somewhat since the middle of…
Inflation continued its upward march last month but showed signs of cooling, according to new data from the Bureau of Labor Statistics.
The Consumer Price Index rose 5% YOY in March, down from 6% in February. Month-over-month, inflation was up 0.1% on a seasonally adjusted basis, compared to 0.4% in February.
The core index, which measures everything but volatile food and fuel costs, ticked up by 0.1% to 5.6% YOY. Though the increase is slight, it’s the first YOY acceleration since September.
“This is obviously a short-term setback for the Fed. However, inflation was never expected to decelerate in a straight line,” Tiffany Wilding, managing director and North American economist at PIMCO, wrote in a note. “[N]otwithstanding this report we…
