July 26, 2022
It seems like just a few weeks ago that the Federal Reserve announced they were raising their short-term interest rates by a whopping .75%, with the objective of halting the rise of inflation. If we look back, the last meeting was exactly six weeks ago. And a lot can happen in six weeks. From an interest rate perspective, mortgage rates spiked in response to the last move by the Fed.
However, they quickly reversed course as analysts became concerned that these high rates would cause the economy to slow. Those same analysts would call that phenomenon “whiplash.” The volatility continued after the jobs report showed the addition of over 350,000 jobs in June, causing rates to rise again. And just to make things more interesting, the inflation report in mid-June showed that the threat of inflation is not receding as of yet.
Thus, the Fed will have plenty of data to chew upon before they release their final decision tomorrow. Right now, it appears the choice is the same as last month—either a .50% or .75% increase in short-term rates. And as we keep observing, this action would not necessarily portend another increase in mortgage rates. As a matter of fact, one day later we will see the release of the preliminary measure of economic growth for the second quarter. That could put us on the roller coaster again.
Source: Origination Pro