The Federal Reserve raised its key short-term interest rate by a quarter percentage point today. The decided to continue their same path, raising the short term rate to try to lower inflation. This is despite some financial turmoil following the collapse of two investment banks.
Some had thought maybe the Fed would not raise rates today. However, the Fed did acknowledge the bank collapses should constrain bank lending and weaken the economy and inflation. “You can think of (the crisis) as being the equivalent of a rate hike and perhaps more than that,” Fed Chair Jerome Powell said at a news conference. They also insinuated they might only raise rates one more time this year and then pause. And also hinted that one more rate increase might not happen.
Because of the positive talk by the Fed that inflation seems to be tempering, mortgage rates applauded and responded with moving slightly lower. Slightly. This was not a huge downward dive, but hopefully this will continue. If the economic reports over the next month show inflation continuing to soften, we should see mortgage interest rates also continue to improve.