The Federal Reserve’s Biggest Test

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The Federal Reserve lowered the Federal Funds rate for a second time this year. They lowered the Federal Funds rate by .25%. The Fed left the “door open” to another drop later this year at their next meeting, but it really seems like that decision will not be reached until they meet next and take another vote. The economy is still strong with low unemployment, solid growth in the 2.0% range, and inflation below current target levels. The US is still a bright spot in the world economy while most other nations are dealing with slowing growth. As with the last drop where mortgage rates rallied downwards, this latest drop in the Federal Funds rate did stimulate a drop in mortgage rates. Mortgage rates have been very volatile for the past few weeks as uncertainty over the market have produced caution in the mortgage rate pricing. Homeowner’s with HELOCs experienced a nice .25% drop in their HELOC rates though.

With pressure mounting from President Trump and investors, the Federal Reserve may be lowering the rate yet again. More to come on that as we hear from officials.