This afternoon, the Federal Open Market Committee unanimously voted to leave the Fed Funds Rate within its target range of 0.0%-0.25% “for an extended period.” It also pledged to honor its $1.25 trillion commitment to the mortgage bond market.
However, the FOMC changed its timeframe on the mortgage-backed bond buys, extending its deadline to March 2010. This is good news! This move should help the Fed keep mortgage rates from rising too high as the economic expansion takes hold.
This is definitely a bond friendly statement. I would expect rate sheets to improve for the remainder of the week.
The FOMC says the U.S. economy is “picking up following its severe downturn” and financial markets have “improved further”.
The economy still has soft spots and the Fed made a point to single them out. Each poses a distinct threat to economic recovery.
- Ongoing job losses
- Sluggish income growth
- Tight credit conditions
Initial market reaction to the Fed’s press release is positive.
Posted by Scott Fowler. Scott can be reached toll free @ 877-627-9211 x 104 or email SFowler@HorizonFinancial.org. Visit Scott’s website @ www.ScottFowlerTeam.com.
