The Federal Reserve cut their Fed Funds Rate today by .25% (or 25 basis points) to the range of 1.50%-1.75%. This comes as no surprise as most economists predicted this rate cut. This is the third cut by the Federal Reserve this year. When the Fed decides to cut rates, they are trying to stimulate economic activity in the consumer, such as making it more affordable to buy a house.
After the statement was released, there was no movement in the Bond market and stocks were still slightly lower. Mortgage rates are generally not directly impacted by the lowering of the Fed Funds Rate on the day it happens. But, today they did end up lower than expected and dropping some to save many mortgage holders money. They will likely continue to drop for the next week or so. Keep an eye out for mortgage rates. If you have a mortgage currently you may want to start the refinance process.
The Federal Reserve Chairman Jerome Powell says that the Fed looks to sustain the current economic expansion. Inflation pressures remain muted and longer-term expectations remain on the low end. Powell says the monetary policy is not on a preset course. He says the US economy is upbeat with a solid job market and household spending and incomes are rising. In other words, this is a really strong economy and people are making more money right now.
For the rest of this week, we are anticipating the Jobs Report to be out on Friday. Tomorrow the Core PCE, Personal Spending and manufacturing data will all be released. This is a very volatile week for rates. Keep floating clients because rates could continue to drop.