Nick, & Cindy Davis

Fed Agrees to maintain Rates

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The Federal Reserve voted unanimously on Wednesday to leave borrowing costs unchanged and says it’s going to continue being “patient” about making any moves to its benchmark rate. The Fed’s vote came despite increased calls from the White House to reduce rates of interest. However the central bank left rates unchanged on Wednesday, citing the lack of inflation pressure.

Fed Agrees to maintain Rates

Fed Agrees to maintain Rates

 

The Fed’s monitored benchmark rate will stay in a range of between 2.25% and 2.5%. The Fed’s rate is the rate charged to banks that lend to each other. Its key rate doesn’t have a direct effect on rates on mortgages but does often influence them.

The Fed’s decision to maintain rates steady likely will result in little change to rates on mortgages, Moneywise.com reports. This week, mortgage financing giant Freddie Mac stated it expects favorable mortgage rates through out this year. It projects the 30-year fixed-rate mortgage to average 4.3% for 2019, below last year’s average of 4.6%.

“Economic activity rose at a solid rate,” and job gains remain solid, the Federal Open Market Committee said in a statement on Wednesday following its two-day meeting. The jobless rate is at 3.8%, the lowest level in 50 years. The economy has performed much stronger in the first quarter than many economists anticipated, CNBC reports. The GDP has increased 3.2%, and the financial markets are performing stronger. The Dow Jones Industrial Average is up 14% for 2019.

Fed officials, thus far, have backed away from original plans to continue tightening rates in 2019, following several increases in 2018. Many officials have cited concerns with regards to a slowdown in global growth. Originally, the Fed signaled two rate hikes this year. However it has since changed those projections to zero, as of the end of its last policy meeting in March.

“The economy looks better than it did when the Fed last met in March, but with inflation readings continuing to decelerate, the Fed is no closer to resuming rate hikes,” says Greg McBride, Bankrate’s chief financial analyst.

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