As anticipated, the Fed bumped up the Federal Funds rate another .25% this week. The markets had little reaction to this move and had already “baked in” its anticipated effects. They made this move to hopefully choke off a surge in inflation moving forward. It is anticipated that the Fed will continue on this path of small bumps for the remainder of this year and next. It is important to note that they are only bumping short term rates. For example, the prime rate (most home equity lines of credit are tied to the prime rate). The new rates only influence the direction of long term fixed rate mortgages. For example long term mortgage rates have not risen as much as short term rates, and we don’t anticipate them to do so. While we don’t want to see rates rise, they are doing so for a good cause – the economy is doing well, the job market is strong, and there is upwards pressure on wages.
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