After ten rate hikes since March last year, the Fed left their benchmark Federal Funds Rate unchanged at 5% to 5.25% at their meeting last Wednesday.
The Fed Funds Rate is the interest rate for overnight borrowing for banks, and it is not the same as mortgage rates. When the Fed hikes the Fed Funds Rate, they try to slow the economy and curb inflation.
Paramount – Inflation has declined sharply from the 9.1% peak seen last June and is now less than half that amount at 4%. While inflation is still elevated, signs of easing inflation are welcome. Declining inflation not only signifies lower costs for some goods and services, but lower inflation also typically helps both Mortgage Bonds and mortgage rates improve over time.