Interest Rate Outlook

What's in a word?  Perhaps little, perhaps much.  In the end, it all depends on the word or who is uttering it.  In terms of communication goes, one word isn't much to go on.

The Federal Reserve ended its September meeting  and while no change to policy was expected, we did see the most subtle of changes in the message the Fed uses to describe its thinking.

In characterizing its present stance of policy and when the Fed might make a change to the short-term interest rate it controls, the Fed indicated that it would be likely to make the first move when it has seen "some further improvement in the labor market”.  Previously, it merely said "seen further improvement."   As one word, "some" isn't much to go on, it is an acknowledgment that the job market has improved, and only needs to improve a tad further before the Fed will feel comfortable kicking off what is likely to be a very slow and protracted process of increasing interest rates.

For their part, mortgage rates have eased a bit in recent days; although each recent message from the Fed says they will make a move before long, financial markets are starting to sense that it will be a long, slow process.

We'll get a new look at the labor market come early September, well in advance of that FOMC meeting). At the moment, and unless the next two reports are well below expectations, we are of the mind that we will see a quarter-point lift in the Fed Funds target rate at that time… and that this may be it until perhaps February 2016.

Now is the time to start looking for that home to buy before rates head up…. And for the seller to place her home on the market!

No comments yet.

Leave a Reply