The Federal Reserve voted unanimously on Wednesday to leave borrowing costs unchanged and says it will continue to be “patient” about making any moves to its benchmark rate. The Fed’s vote came despite increased calls from the White House to cut interest rates. But the central bank left rates unchanged on Wednesday, citing the lack of inflation pressure.
The Fed’s closely watched benchmark rate will remain in a range of between 2.25% and 2.5%. The Fed’s rate is the rate charged to banks that lend to each other. Its key rate does not have a direct impact on mortgage rates but does often influence them.
The Fed’s decision to hold rates steady likely will result in little change to mortgage rates, Moneywise.com reports. This week, mortgage financing giant Freddie Mac said it expects favorable mortgage rates for the remainder of this year. It projects the 30-year fixed-rate mortgage to average 4.3% for 2019, below last year’s average of 4.6%.
“Economic activity rose at a solid rate,” and job gains remain solid, the Federal Open Market Committee said in a statement on Wednesday following its two-day meeting. The jobless rate is at 3.8%, the lowest level in 50 years. The economy has performed much stronger in the first quarter than many economists anticipated, CNBC reports. The GDP has increased 3.2%, and the financial markets are performing stronger. The Dow Jones Industrial Average is up 14% for 2019.
Fed officials, so far this year, have backed away from original plans to continue tightening rates in 2019, following several increases in 2018. Many officials have cited concerns about a slowdown in global growth. Originally, the Fed signaled two rate hikes this year. But it has since changed those projections to zero, as of the end of its last policy meeting in March.
“The economy looks better than it did when the Fed last met in March, but with inflation readings continuing to decelerate, the Fed is no closer to resuming rate hikes,” says Greg McBride, Bankrate’s chief financial analyst.
Source: “Fed Holds Rates Steady, Citing Lack of Inflation Pressure,” CNBC (May 1, 2019) and “Federal Reserve Holds Interest Rates Steady, Notes Unexpectedly Soft Inflation,” Bankrate.com (May 1, 2019)