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Tag Archives: FOMC,Fed Funds Rate

A Simple Explanation Of The Federal Reserve Statement (June 22, 2011 Edition)

Putting the FOMC statement in plain EnglishWednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 10-0 — the fourth straight unanimous vote for the nation’s Central Bank.

In its press release, the FOMC said that the economy is recovering, although “somewhat more slowly” than what was expected. Labor markets have been weaker than anticipated and the Fed believes that is, in part, a result of higher food and energy costs, and supply chain disruptions as a result of “tragic events in Japan”.

Some economic bright spots identified by the Fed include expanding household spending, and increased business investment.

These comments were in-line with what Wall Street expected from Chairman Ben Bernanke and the members of the Federal Open Market Committee.

The Fed stayed on message with respect to inflation, too. It acknowledged inflationary pressures on the economy, but attributed them to rising commodity costs and the aforementioned supply-chain disruption. The Fed expects long-term inflation to be stable. 

And, lastly, the Federal Reserve re-affirmed its plan to end its $600 billion pledge to bond markets June 30, and to hold the Fed Funds Rate near zero percent “for an extended period” of time. 

Again, no surprise.

Mortgage market reaction to the FOMC statement has been even this afternoon. Mortgage rates in Los Angeles are unchanged and leaning lower. Note that sentiment can shift quickly, however. If today’s mortgage rates fit your budget, consider locking in your rate.

The FOMC’s next scheduled meeting is August 9, 2011.

March Fed Minutes Show Inflation Risks And Rate Hikes On The Horizon

Fed Minutes March 2011The Federal Reserve released its March 15 meeting minutes Tuesday. The notes revealed a Federal Reserve split between optimism and caution for the U.S. economy.

The minutes’ official name is “Fed Minutes”. It’s a periodic publication, published 3 weeks after each meeting of the Federal Open Market Committee. The FOMC meets 8 times annually, so the Fed Minutes is published 8 times annually, too.

The Fed Minutes is similar to the meeting minutes released after a condo board gets together, or after a meeting of the Board of Directors at a large corporation. The minutes give a detailed account of the important conversations and debates that occurred among the attendees.

At the Federal Reserve, those conversations are deep and, as such, the minutes are long; much longer than the more well-known, post-meeting press release anyway.

Whereas the press release is measured in paragraphs, the minutes are measured in pages.

Here is some of what the Fed discussed last month:

  • On inflation : Pressures are rising, but largely because of food costs and oil costs.
  • On housing : The market remains “depressed” with large inventory and weak demand.
  • On stimulus : The Fed will keep its $600 billion bond plan in place.

In addition, there was talk about ending the Federal Reserve’s accommodative monetary policy (i.e. the near-zero percent Fed Funds Rate). The FOMC’s voting members unanimously elected to leave the Fed Funds Rate near 0.000 percent last month, but there was talk of raising the benchmark rate later this year.

Conforming and FHA mortgage rates in Los Angeles are mostly unchanged since the Fed Minutes release.

A Simple Explanation Of The Federal Reserve Statement (April 28, 2010 Edition)

Putting the FOMC statement in plain EnglishToday, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

In its press release, the FOMC noted that, since March, the U.S. economy “has continued to strengthen” and that the jobs markets “is beginning to improve”.  This is a step up from the last meeting after which the Fed said jobs were “stabilizing”. 

It also reiterated that business spending “has risen significantly”.

Today’s statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year’s financial crisis.

Threats remain to growth, however. The Fed fingered a few:

  1. Employers are reluctant to hire new workers
  2. High unemployment threatens consumer spending
  3. Consumer credit (still) remains tight

Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent “for an extended period”.  This was expected.

Overall, the statement’s tone was positive and the Fed noted that inflation is within tolerance. 

Mortgage market reaction has been muted thus far. Mortgage rates in Los Angeles are unchanged post-FOMC.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010.  The 55-day span between meetings will be the FOMC’s longest of 2010.

A Simple Explanation Of The Federal Reserve Statement (March 16, 2010 Edition)

Putting the FOMC statement in plain EnglishToday, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged, in its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen” and that the jobs markets “is stabilizing”.  It also said that business spending has “has risen significantly”.

This is a slight departure from the Fed’s January statement in which housing was not mentioned and business spending was said to be “picking up”.

It’s also the sixth straight statement from the FOMC in which the Fed described the economy with optimism.  This is a signal to markets that 2008-2009 recession is over and that economic growth is returning.

The economy is not without threats, however, and the Fed identified several:

  1. High unemployment threatens consumer spending
  2. Housing starts are at a “depressed level”
  3. Consumer credit remains tight

The message’s overall tone, however, remained positive and inflation is within tolerance limits

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to end its $1.25 trillion commitment to the mortgage market by March 31, 2010. Fed insiders estimate that the bond-buying program lowered mortgage rates by 1 percent since its start.

Mortgage market reaction to the Fed press release is, in general, ambivalent. Mortgage rates in Santa Rosa are unchanged this afternoon.

The FOMC’s next scheduled meeting is a 2-day affair, April 27-28, 2010.

A Simple Explanation Of The Federal Reserve Statement (March 16, 2010 Edition)

Putting the FOMC statement in plain EnglishToday, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged, in its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen” and that the jobs markets “is stabilizing”.  It also said that business spending has “has risen significantly”.

This is a slight departure from the Fed’s January statement in which housing was not mentioned and business spending was said to be “picking up”.

It’s also the sixth straight statement from the FOMC in which the Fed described the economy with optimism.  This is a signal to markets that 2008-2009 recession is over and that economic growth is returning.

The economy is not without threats, however, and the Fed identified several:

  1. High unemployment threatens consumer spending
  2. Housing starts are at a “depressed level”
  3. Consumer credit remains tight

The message’s overall tone, however, remained positive and inflation is within tolerance limits

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to end its $1.25 trillion commitment to the mortgage market by March 31, 2010. Fed insiders estimate that the bond-buying program lowered mortgage rates by 1 percent since its start.

Mortgage market reaction to the Fed press release is, in general, ambivalent. Mortgage rates in Los Angeles are unchanged this afternoon.

The FOMC’s next scheduled meeting is a 2-day affair, April 27-28, 2010.

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