Fed Decides to Leave Rates Alone—For Now

Kelsey Ramírez  |   May 2, 2018

The Federal Reserve decided Wednesday that it would not raise rates and keep its benchmark interest rate unchanged, despite rising inflation. Mortgage rates are not directly tied to the Fed’s benchmark rate, but they do tend to be influenced by them. The Federal Open Markets Committee had raised rates for the first time in 2018 at its last meeting in March. At that time, it had increased the federal funds rate by 25 basis points. At May’s meeting, the FOMC voted to keep rates the same and maintain the target range at 1.5 percent to 1.75 percent. “Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate,” the committee noted in a statement. “Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.” Inflation has risen to nearly 2 percent. The FOMC also said that it expects to continue gradually raising interest rates later on, but that they will likely remain at historically low levels “for some time.” “The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the committee stated. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data”

Source: Housing Wire