Last Wednesday the Federal Reserve had its March FOMC meeting and left the Fed Funds Rate alone at 5.25%-5.5%. They believe the inflation rate is still moving in the right direction, but the January and February higher inflation rates appear to be seasonally prone to err.
Chair Powell reiterated the Fed will be keeping the rates higher for longer, committed to their 2% inflation target. They see the two-sided risk on keeping rates too high and causing a potential recession but are more concerned about lowering rates prematurely and reigniting inflation.
Powell spoke several times about housing and shelter prices being sticky because of low inventory.
Unemployment is up to 3.9% from 3.7%. The Fed will be sensitive to an unemployment level going much over 4%… it is an election year…
Their Dot Plot tracks what the committee members believe future rates and actions will still show 3 rate cuts in 2024. They’ll have to come in the 2nd half of the year.
One interesting comment was about the Fed’s Spreadsheet and approach to Quantitative Tightening (QT). The Fed accumulated a huge $9 Trillion when they bought Bonds and Mortgage Backed Securities during the pandemic to artificially lower interest rates. They have been liquidating their holdings at a fair pace, but it adds more securities to the financial system, keeping rates a bit higher than they would be otherwise. The holdings are now around $6.9 T. Powell indicated they believe they can slow the pace of the run-off. That should help bring rates down in the second half of the year also.
Mortgage rates have bounced around over the last few months, but are presently at their lows for the last couple of weeks, and back under 7% for the standard 30-year fixed.
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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