On concerns that economic growth is losing steam, the Federal Reserve held interest rates steady on Wednesday, left in the 2.25 to 2.5 percent range.
“Growth of economic activity has slowed from its solid rate in the fourth quarter [of 2018],” according to a Fed statement. “In light of global economic and financial developments and muted inflation pressure, the [Federal Open Market] Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.”
The agency had hinted at a pause in recent weeks, and with the announcement on Wednesday, indicated it has no intent to raise rates this year. Analysts had been anticipating one or no increase for 2019.
The decision is a departure from the Fed’s recent stance, which had aligned with encouraging gains in the labor market in the past year. The Fed increased the interest rate four times in 2018, and in December, indicated two more in the tank for the upcoming year. The beginning of 2019, however, has been sluggish. In January, the economy generated 304,000 jobs, but in February, eked out only 20,000—an alarming figure that was influenced, potentially, by the shutdown. Concern about the economy on the global stage, including Brexit’s influence on the market, is growing, as well.
Borrowing costs escalate when the Fed rate rises—but costs in the current environment are moderately low, and for homebuyers, fixed-rate mortgages are moved by treasury yields, not the benchmark rate. According to Freddie Mac, the adjustable-rate mortgage is averaging 3.84 percent.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at email@example.com.