Federal Reserve
Explaining What the Federal Reserve Did in Plain English
April 30, 2009 by James K Barath, CMPS · Leave a Comment
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today within its target range of 0.000-0.250 percent. The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.
In its press release, the FOMC noted that the economy may still be contracting, but that it’s not happening with the same speed as in prior months. Household spending is stabilizing and financial markets are “easing”.
Nevertheless, threats to the recovery are everywhere with the following items on the Fed’s short list:
- The growing ranks of unemployed workers
- The reduction of housing wealth nationally
- Reduced inventories and investment from business
Furthermore, the FOMC fingered today’s inflation levels as too low to support economic growth. This justifies the Fed’s plan to hold the Fed Funds Rate near zero percent “for an extended period”.
For home buyers and refinancing homeowners, today’s press release was not favorable.
After the Fed’s announcement, stock markets rallied on the idea that the worst of the economy really is over and that led to a broad bond market sell-off. Mortgage rates spiked in response, adding as much as 0.125 percent, in some cases.
The FOMC’s next scheduled meeting is June 23-24, 2009.
Source
Parsing the Fed Statement
The Wall Street Journal Online
April 29, 2009
http://online.wsj.com/public/resources/documents/info-fedparse0904.html
About the Author: James K Barath is a Certified Mortgage Planning Specialist, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James Barath today for your Borrow Smart Analysis - the CALM Approach to Borrowing ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy! 