Mortgage Rates Not Affected by Fed Increase
The Federal Open Market Committee on Tuesday raised short-term interest rates for the 11th straight time, hiking the fed funds target rate to 3.75 percent - its highest level in more than four years. Although this is the rate that banks charge each other for overnight loans, it will also boost rates on credit cards, auto loans, home equity loans and adjustable-rate mortgages.
Although the Fed acknowledged that the impact from Hurricane Katrina would be a setback in the near term, it said it does "not pose a more persistent threat. Higher energy and other costs have the potential to add to inflation pressures." The Fed also opted to retain the word "measured" in its statement, reaffirming that rate hikes will continue.
Coming Up:
There are no reports scheduled for release on Wednesday, which will leave the financial markets to continue scouring the nuances of the Fed statement. If Wall Street determines that the Fed is being vigilant in fighting inflation, stocks could turn around. Treasuries appear to have already accepted that premise, and could hold steady due to the lack of economic input.
If Treasuries maintain a status quo, mortgage rates are likely to do the same.
Although the Fed acknowledged that the impact from Hurricane Katrina would be a setback in the near term, it said it does "not pose a more persistent threat. Higher energy and other costs have the potential to add to inflation pressures." The Fed also opted to retain the word "measured" in its statement, reaffirming that rate hikes will continue.
Coming Up:
There are no reports scheduled for release on Wednesday, which will leave the financial markets to continue scouring the nuances of the Fed statement. If Wall Street determines that the Fed is being vigilant in fighting inflation, stocks could turn around. Treasuries appear to have already accepted that premise, and could hold steady due to the lack of economic input.
If Treasuries maintain a status quo, mortgage rates are likely to do the same.
<< Home