Great News -Feds Ease Up on Hiking Interest Rates as Inflation Cools
The Federal Reserve is easing rate hikes up as inflation cools. During its January meeting, the Feds raised the benchmark interest rate by 25 basis points. The quarter-percentage-point increase is the smallest rate boost since March 2022.
To recap, rates were raised by 0.50% in December and 0.75% in November in a more aggressive effort to combat inflation.
“Recent indicators point to modest growth of spending and production this quarter,” Fed chair Jerome Powell said in Wednesday’s Federal Open Market Committee’s (FOMC) press conference.
Officials hinted at raising rates again in March to reach its target of reeling inflation to a 2% range.
“While the FOMC statement noted that inflation has ‘eased somewhat,’ the unanimous vote of monetary policymakers to raise rates another 25 basis points – and signal that further increases are likely – indicates that markets should anticipate that the Federal Reserve will keep short-term rates higher for longer,” expressed Mortgage Bankers Association chief economist Mike Fratantoni.
What this means for mortgage rates in 2023
We anticipate a modest drop in mortgage rates through 2023, ending closer to 5% than the 6% we have today.