Apr
30
Feds Cute Rate 1/4 Point
Filed Under (Mortgage New) by jorge on 30-04-2008
The Federal Reserve cut the rate by 1/4 much in line with what was expected. It was less aggressive than their positions late in 2007, but it helped calm the market. Wall street showed a positive response and is currently in positive territory only two hours before the closing bell.
In addition the Federal Reserve issues a positive note that it expects inflation to improve. That however remains to be seen. Their actions today shows a conservative stance but they did say the they are ready to "act as needed to promote sustainable economic growth and stability."
"Financial markets remain under considerable stress and tight credit conditions and deepening housing contractions are likely to weigh on economic growth over the next few quarters," the Fed officials said.
"Financial markets remain under considerable stress and tight credit conditions and deepening housing contractions are likely to weigh on economic growth over the next few quarters," the Fed officials said.
While saying the central bank expected inflation to moderate in coming months, the Fed statement said that "uncertainty about the inflation outlook remains high," adding that it would be necessary to "continue to monitor inflation developments carefully."
Current Mortgage rates are showing a different picture and are heading slightly upward over the past two weeks. Fears of inflation have reflected on the Bonds and thus producing a higher interest rate for Mortgages. Currently levels are just under 6.0% for a 30 year fix loan. Consumers are not getting the benefit of the Feds actions. So where is the benefit? It is in the pockets of the lenders. They are hedging their portfolios against losses.
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