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The Federal Reserve kept its short-term policy rate steady for the 3rd-straight meeting. Nobody really expected a rate hike (or a rate cut), so no surprises there. The official press release didn’t say anything new.
The Federal Reserve kept its short-term policy rate steady for the 3rd-straight meeting. Nobody really expected a rate hike (or a rate cut), so no surprises there. The official press release didn’t say anything new.
The stock and bond market rejoiced. The Dow and the S&P 500 rose to record levels. The yield on the 10-year US treasury bond dropped 30 basis points to 3.93% (not long ago it was threatening to move above 5%). The prices of mortgage backed securities ripped higher. [MBS Highway]
30-year mortgage rates in the 6s! Even before Wednesday’s big moves, average 30-year mortgage rates had already moved down to 6.82%. By midday Thursday, the average 30-year mortgage rate reported by Mortgage News Daily was 6.62% — and this will probably go even lower tomorrow. Mortgage rates have decreased by nearly 1.5% in just two months! [Mortgage News Daily]
Inflation keeps easing
The day before the Fed decision, the November CPI (Consumer Price Index = inflation for me and you) came out. The headline CPI was up just 0.1% month-over-month in November, after being flat in September. On a year-over-year basis, headline CPI eased from 3.2% → 3.1%. [BLS]And on the day of the Fed decision, we got the November PPI (Producer Price Index = inflation for businesses), which was up just 0.9% year-over-year in November, down from +1.2% year-over-year in October. [BLS]
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