Corona CA home loans, real estate loans, home finance information – Turpin group powered by Cherry Creek Mortgage

My New Blog

August 11th, 2010 8:38 AM

TUESDAY AFTERNOON UPDATE:

Today's FOMC meeting has adjourned with no change to key short-term interest rates. However, the post-meeting statement did give us a bit of a surprise that was quite favorable to the bond market and mortgage rates. In the statement the Fed indicated that they expect the economy to grow at a slower pace than estimated at the last FOMC meeting in late June. They renewed their "subdued" outlook for inflation, which is the key point for the bond market and the indication that they expect to keep key interest rates at their current level for an "extended period." That leads market participants to believe that the Fed is still concerned about the economy's ability to expand and maintain momentum.

The surprise came from an announcement that the Fed will use funds from its holdings in mortgage bonds to buy more government debt. What this means is that the Fed is taking its interest payments and reinvesting them int o the economic recovery. This will be a much smaller campaign than we saw from them last year and early this year, but it is still considered good news. The goal is to help keep long-term interest rates low, such as home mortgage rates and corporate bond rates, in an effort to spur more spending and economic activity. The general consensus is that the impact this will have on the economy is minimal, but it does show that the Fed is attentive to current conditions and is ready to take more measures if needed.

Posted by Brad Turpin on August 11th, 2010 8:38 AMPost a Comment (0)