Market reaction to the Fed’s rate decision was largely positive, with mortgage rates already showing signs of decline in anticipation of potential rate cuts.
Mike Fratantoni, chief economist at the Mortgage Bankers Association, is one of the industry experts closely watching these developments.
“The FOMC did not change its target for the federal funds rate but did shift its statement to acknowledge that inflation is slowing, unemployment is rising, and that there are now more balanced risks to the economy,” Fratantoni said. “While the Fed still hopes for a slower rate of inflation, there is a greater risk now that keeping monetary policy overly tight for too long could lead to unnecessarily higher unemployment.”
Fratantoni expressed confidence in the likelihood of rate reductions this year, suggesting that such a move could drive mortgage rates lower and potentially increase refinancing activity.
“The FOMC vote to keep rates steady for now was unanimous, but there have been increasing calls from many Federal Reserve officials to begin cutting rates,” he said. “We are holding to our call for two rate cuts this year, with the first in September, as we expect that inflation will continue to moderate.
Source: mpamag.com