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Tag Archives: Federal Reserve

The Fed does the expected, but what’s next?

Mid-March marked the first time that the Federal Reserve raised its rate in 2017. In bumping the rate up .25 percent, they noted that the economy is doing well and that we are approaching full employment. The bond market’s reaction to the move was surprisingly positive. We saw treasury and mortgage rates go down slightly that day, which is contrary to what we would have expected. Experts say that happened because the interest-rate increase was widely expected by the markets and it also signaled that the Fed is staying ahead of the inflation curve. When Chairwoman Janet Yellen was asked ...

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The Fed “busts a move”

For the second time in nearly a decade, the Federal Reserve raised short-term interest rate, this time by .25 percent. The move was widely expected, as the futures markets had predicted in the last few weeks that there was a 100 percent probability that the Fed would raise rates. The bond market was not happy about Fed Chair Janet Yellen’s comments after the move. Bonds were caught off guard because the Fed changed their forecast for raising rates in 2017 from two increase to three. Although Yellen stated that any future moves would be data dependent, the market was caught ...

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All eyes are on the Fed this December

    December seems to be the month the Fed is most comfortable with. They raised short-term rates in December 2015 for the first time since 2006 and now it looks almost certain that they will raise them again in December 2016. Last year was interesting in that all rates moves up prior to the Fed raising rate in December but in the months following the hike, mortgage and treasury rates actually fell. Mortgage and treasury rates move up or down based on economic reports. The months following last year’s hike showed that economic indicators were average at best and ...

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The Fed stays the course on rates

    The Federal Reserve decided not to raise rates at their September 20-21 meeting, citing a lack of inflation and point out that the overall economy is moving at a steady pace and not overheating. The vote was 7-3 within the Fed not to raise rates. While there were some strong opinions from the three Fed presidents in favor of a rate hike, Chairwoman Janet Yellen cited that employment was in check and there was not a need at this time to make a move. The futures markets had only placed a 12 percent chance that the Fed would ...

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Federal Reserve stays the course

  The Federal Reserve decided to leave rates alone at their mid-June meeting, citing a very weak jobs report in June and downward revisions to the two previous months of job reports. The Fed raised short-term rates in December of 2015 for the first time in nine years because economic data indicated that the economy was finally on the mend. The guidance that the Fed gave at that time was that they were planning on raising rates four times this year at a pace of a quarter of a point per raise. The statement that the Fed made after the ...

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The Fed backs off

The Fed meets every six to seven weeks to discuss monetary policy with regional representatives called Fed presidents. They gather with Fed chairwoman Janet Yellen to discuss and vote on whether to raise or lower rates, or keep them the same. On March 16, the Fed met and took a softer tone on raising rates this year. After a historic interest rate rise in December — the first in nine years — the Federal Reserve initially estimated that it would raise the federal fund rate four more times in 2016 because it thought that the economy would be strong enough ...

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Mortgage rates drop again!

  This has been a challenging year so far for the financial world. With stock indices down close to 20 percent and with oil dropping to its lowest level since 2003, mortgage rates have remained unexpectedly low. The economy reported a weak 4th quarter reading for GDP (Gross Domestic Product) and the February jobs report showed that job creation was below the pace of previous months. With world economies still showing signs of weakness, the Fed, which has stated that they would like to raise rates four times this year, have begun scratching their heads. Fed Chairwoman Janet Yellen recently ...

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The Fed finally did it!

  The Federal Reserve finally pulled the trigger on raising a key short-term rate that will inevitably lead to increases in the rates for credit cards, car loans and home equities. This marked the first time in nine years that the Fed has raised rates and marks the end to near-zero lending rates to banks. What does this mean? Consumers will pay a little more on their loans and savers will earn a little bit more from the money that they have in the bank. The Fed is hoping to raise rates two more times in 2016, but said that ...

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When will the Fed pull the trigger?

  It is not clear when the Federal Reserve will pull the trigger and raise shorter-term rates. It has been quite some time since the Fed has had to do this. The last time they raised rates was in 2007. Let me be clear, what the Fed raises is not mortgage rates, but rather a short-term rate that is call the Fed Funds Rate. This is the rate that banks charge to borrow money from each other. If the Fed raises this rate, then banks will usually increase their rates to consumers or business that borrower to them. This will ...

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