Federal Reserve Votes to Keep Interest Rates Steady
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Federal Reserve Votes to Keep Interest Rates Steady

Federal Reserve

“Job gains have been solid, on average, in recent months, and the unemployment rate has remained low." - U.S. Federal Reserve

For the time being, the U.S. Federal Reserve is planning to keep borrowing costs steady, the central bank said in a recent announcement.

Despite calls from President Trump to lower its rates, the Fed on Wednesday voted unanimously to be “patient” and keep interest rates at its current range of between 2.25 percent and 2.5 percent.

“Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter,” the Federal Reserve wrote. “On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.”

The 2.25 to 2.5 percent rate is the rate charged to banks and financial institutions that lend to one another. While the rate is a key influencer and something real estate investors should be aware of, the Fed rate doesn’t directly impact the cost of mortgages.

Its current rate is historically low for the Fed, helping to fuel gross domestic product growth of nearly 3 percent in 2018. The Fed predicts, however, that the United States’ GDP will grow only 2.2 percent in 2019.

Some economists say that the unchanged rate shouldn’t affect mortgage costs. Freddie Mac recently reported that investors and buyers should enjoy favorable mortgage rates through 2019, projecting that the 30-year fixed-rate mortgage will average at about 4.3 percent — .3 percentage points lower than 2018’s average.  


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