June’s FOMC meeting met the expectations of most economic experts, with the Committee voting to increase the federal funds rate. The target range increased to 1.75% to 2.0%, up from its previous range of 1.5% to 1.75%.
Just four months into his tenure, Chairman Jerome Powell is leading a unified Committee, with current voting members unanimously agreeing to the rate changes.
While the hike is certainly newsworthy, Chairman Powell’s press conference offered insights regarding the Committee’s communication process and U.S. economic indicators. Let’s take a look at everything we learned from this month’s meeting.
Rate Hike is Big (But Expected) News
Most experts agreed leading up to the FOMC’s June meeting that a rate hike would likely take place — and they were right. The 0.25% increase was widely expected as the second change in rates this year, following the first increase in March.
A recent survey from Bloomberg showed experts predicting either one or two more hikes for the remainder of the year. The key meetings to look at are September and December. The country’s economic trajectory will likely be the biggest influencer determining how many more increases we can expect this year.
A new change in communications from Chairman Powell at June’s meeting, however, opens the door to a less predictable pattern in rate hikes by the Fed.
Changes from Chairman Powell
The biggest change in June’s meeting besides the federal funds increase was Chairman Powell’s announcement that he will hold brief news sessions after each FOMC meeting moving forward. Previously, Fed chairs would hold press conferences following just four of the eight annual meetings.
While this change certainly signals a new degree of transparency from the Fed, it also complicates the process for predicting future rate increases. Historically, the Committee would reserve major monetary policy changes for meetings with press conferences scheduled in order to allow the chair to explain the changes and take media questions.
Now, however, Chairman Powell has opened the door to rate hikes after any meeting. So while the big question earlier this year was, “Will we have three or four rate hikes?” there’s now less basis for the assumption that four will be the maximum.
FOMC’s Economic Outlook
While all of these changes certainly are big news, the Fed also shed light on some of the key indicators strengthening the nation’s economy. In this month’s FOMC statement, the overall economic activity was described as “rising at a solid rate.” At May’s meeting, it was described as rising at just a “moderate” rate.
The Committee noted that unemployment has declined since the last meeting and that household spending has “picked up.” Both of these indicators demonstrate more positive language than the previous meeting’s press release.
Next Steps for Homebuyers
All of these changes from the FOMC can certainly influence the course of mortgage rates over the coming months.
Borrowers who are prepared with their files can quickly take advantage of any small dips and sways that come up in the market. If you’re considering purchasing a new property in the near future, call one of our mortgage bankers to see what’s happening with rates today.
Starting a dialogue and getting prepared in advance can help you jump exactly when the moment is right for your next real estate move.