The prices remained unchanged after the Fed meeting. (action))
The federal reserve has just met to discuss the possibility of interest rate drops. This time, the Fed decided to extend the rate break, Leash rate between 4.25% and 4.5%. The decision came due to the stable economic activity which should grow in the first quarter. Economists largely expected this result.
“The Fed will keep the rates they are today,” predicted Melissa Cohn, regional vice-president of William Raveis Mortgage. “(President of the Federal Reserve Jerome Powell) said on several occasions that the Fed was not in a hurry to reduce rates.
Although the Fed noted that inflation remains high, the unemployment rate has stabilized and the labor markets are always solid. To bring the economy closer to 2%, the Fed finally decided to leave rates where they were.
“Although the economic activity of the economy of the first quarter is always on the right track to report growth, American households are increasingly concerned about potential reinflation, their employment of employment and their financial prospects, which prevents them from making major expenses,” said Dr. Selma Hepp, chief economist of Corelogic, in a press release. “At the same time, many always catch up with inflation in housing and related services in recent years.”
Despite a slow growth economy, consumers are not entirely confident in the economic situation. A variety of social and political actions always has an impact on American households. The newly implemented prices are one of the factors contributing to this uncertainty.
“The Federal Reserve War in the fight against obstinate inflation continues to have an impact on the daily life of American households,” said Anya Gezunterman, director of the Imperial Fund Asset Management, in a statement. “In addition to this, the Fed must now examine closely any price increase in prices, which would also maintain higher interest rates for longer.”
“That said, as the economy seems to continue its so-called mild landing '', we expect mortgage rates to be lower during the summer gradually, but not more than one percentage point,” said Gezunterman.
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Two other rate drops are predicted by the end of the year
The prices remained unchanged after the Fed meeting, but they reported that two rate drops would occur This year. Economists are largely suitable that consumers will see the cuts shortly. Barclays analysts Expect two drops of prices in the quarter point, probably in June and September. They previously thought that there would be only one cup in June.
“The softer labor market makes us add another rate drop, despite higher inflation,” said Barclays analysts.
Barclay provides that a slowdown in the labor market will increase the unemployment rate later in the year, unemployment culminating at 4.3% in October.
The first drop in rate in June should “reflect (this) slower growth and increase unemployment”. The second drop in the rate in September should indicate “an increase in the unemployment rate and certain signs of improving monthly inflation printing”.
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Mortgage rates have reached a two -month hollow this week, remain less than 7%
Consumer confidence has dropped considerably last month
Many consumers do not consider the economy as stable, as indicated by the Consumer confidence survey. Consumer confidence measures the way Americans feel commercial and economic conditions.
The current situation index dropped from 3.4 points to 136.5 in February, while the expectations index also dropped from 9.3 points to 72.9. Below 80 on the index, generally signals a recession on the horizon. This is the first time that the index has been also low since June 2024.
“In February, consumer confidence has recorded the greatest monthly decline since August 2021,” said Stephanie Guichard, principal economist, global indicators at Conference Board. “This is the third consecutive decline per month, bringing the index to the bottom of the range since 2022 … The views of the current labor market conditions were weakening. Consumers have become pessimistic about future and less optimistic commercial conditions. The pessimism on future employment prospects has worsened and has reached a future income.”
More people intended to buy houses, showing an area of improvement. The very recent drop in mortgage rates is probably the reason why buyers are more willing to buy. However, as expected to make larger purchases, such as televisions and other electronic devices.
“Average inflation expectations of 12 months increased from 5.2% to 6% in February. This increase probably reflected a mixture of factors, including sticky inflation, but also the recent leap in basic food prices such as eggs and expected prices,” said Guichard. “There has been a sharp increase in trade and prices mentions, at an invisible level since 2019.”
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