January 30th, 2015
Consumers who have been fond of historically low interest rates can continue to look forward to affordable financing, as indicated by Federal Reserve’s statement from its December 2014 meeting. The Federal Open Market Committee (FOMC) said current economic conditions don’t dictate any changes to monetary policy.
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the statement read. “However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.”
US economic status on upward swing
The FOMC also noted it would further delay any adjustments if the economy doesn’t continue to perform well. The Fed hinges its monetary policy decisions on several factors, with the two biggest concerns being employment and inflation. Currently, the economy has surpassed both of the Fed’s stated benchmarks for these areas, and the FOMC expects inflation specifically to continue on a downward trend.
According to recent employment data from the U.S. Bureau of Labor Statistics, 42 states and the District of Columbia saw a decline in unemployment in December 2014 compared to the previous month. Additionally, the national unemployment rate dropped to 5.6 percent that same month.
Even with the apparent progress, however, the Fed indicated it would keep the funds rate low for some time in case economic conditions don’t appear to remain at target rates for the long term. This has already been indicated by the fact that the central bank has yet to make an adjustment despite the economy reaching benchmark improvements some time ago.
Affordable financing remains available
Many economists predict the adjustment to the federal funds rate will come in mid-2015, according to International Business Times. This decision may be hinged on economic conditions overseas, as the Fed indicated it will keep an eye on “international developments.”
While the timeline for any changes to the funds rate have remained ambiguous, what is clear is that consumers can continue to get low interest rates on their home loans for some time. Mortgage News Daily reported mortgage rates fell following the Fed statement’s release, as bond markets had a positive reaction, which in turn encourages a drop in rates.