Real Estate Marketing & Beyond
After raising interest rates several times in 2018, the Federal Reserve seems likely to hold off on any further increases. During the Fed’s latest meeting this month, board members agreed not to raise the benchmark interest rate now or at its next meeting in March.
Still, Federal Reserve officials did say they can expect to increase rates at some point in 2019, as it expects economic growth to remain strong enough to support such as raise, the New York Times reported.
The news will be welcomed by most mortgage borrowers as Fed rate increases almost inevitably lead to an increase in mortgage rates. The Fed’s benchmark interest rate does not directly impact those rates, but it usually influences the direction they go.
In December, Federal Reserve Jerome H. Powell noted that the U.S. economy remains strong, but since then stock markets have slumped and asset prices have nosedived. As a result, the Fed says it’s taking concerns over the economy into consideration.
As such: “Participants expressed that recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier.”
The Fed’s tone still remained upbeat about low unemployment and consumer spending. Charles Evans, president of the Federal Reserve Bank of Chicago, predicts “another good year in 2019” for the economy.
However, a government shutdown and tensions between the U.S. and China are igniting some concerns. “If the pessimism evident in financial markets eventually shows through to economic outcomes, there would be less need (and perhaps no need) for further increases in interest rates,” says Eric Rosengren, president of the Federal Reserve Bank of Boston. “However, my current expectation is that the more optimistic view will prevail.”
