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August 5th, 2008

FOMC: No Rate Change Likely

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The Federal Open Market Committee’s (FOMC) one-day meeting today will likely result in no change to interest rates. Market observers widely expect a change in rates to come either later this year or next.

“The Fed’s preference would be to raise rates as soon as possible,” said Keith Gumbinger, HSH Vice President. To remain impartial, the Fed is not likely to take any action at their October meeting, just prior to the presidential election. Keep in mind that the Fed doesn’t need to wait for a scheduled FOMC meeting to change rates; they did it earlier this year, and could do so again at any time if market conditions require it.

For the last couple of months, the Fed has been juggling the idea of raising interest rates to stem inflation, help stabilize our financial system, and aid the struggling economy. A recent decline in oil prices and a weak labor market have quelled inflation to a point where the Fed has delayed increasing rates to correct surging prices.

The FOMC will meet three more times before the year is out. A presidential election smack in between will make things interesting. We’ll keep you updated.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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