Fed keeps interest rates unchanged a second time
In a move that most market analysts expected, the Federal Reserve announced another pause in rate changes after its March meeting that ended Wednesday. The pause mirrors a similar decision in January, which itself was preceded by three consecutive cuts to the federal funds rates.
The federal funds rate will stay at the range of 4.25%-to-4.5%. The nation’s central bank did predict it could cut rates by half a percentage point by the end of the year.
The Fed also adjusted its view of the overall economy as a key aspect behind the pause. “Uncertainty around the economic outlook has increased,” a document released after the meeting stated.
Questions surrounding President Donald Trump’s tariff threats also pushed the Fed to lower its estimate for economic growth to 1.7% this year, down about 0.4 percentage points from its December estimate. It also expressed concern over inflation, predicting a rise in prices of 2.8% for the year, up about 0.3 percentage point.
What does this mean?
The announcement from The Fed means that the cost to borrow money will stay about the same as it’s been since the last Federal Open Markets Committee meeting in January.
The initial market reactions were mostly positive. The bond market rose slightly, while stocks climbed about 0.6% after the announcement.
How does this affect homeownership?
The Fed’s decisions on interest rates can influence almost every aspect of the economy. The last time the Fed cut interest rates, mortgage rates rose, so the two aren’t directly related. However, interest rates do affect the bond market, which in turn does influence mortgage rates.
There are a few scenarios that could be in play:
If investors believe the Fed has done enough for inflation, they could rush into the bond market and drive rates lower.
There’s also the possibility of inflation coming back into focus. That has the potential to push rates higher.
The bottom line is, if you need to buy a home, you should buy a home. If you can afford to wait, you may want to wait.
The team at Rate is here to help you navigate a tricky housing market. If you have questions, we have team members available to support you. Also, if you know you need to start the homebuying process, we can assist you in getting a mortgage pre-approval.
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