As expected, the Fed met on June 14th and announced that they would not raise the Fed Fund’s rate. However, Jerome Powell made it clear that this is not the end of the rate hikes. As we are getting closer to the target inflation rate of 2%, the Fed is slowing down their rate hikes in order for lagging effects of previous increases to take effect. It’s the Fed’s way of using a little finesse to hopefully minimize the risk of overshooting their target. But Powell did point out that the Core PCE Price Index has not been coming down as much as they like. The PCE is the Price Consumer Expenditure – which represents the prices people pay for domestic goods and services excluding food and energy. As long as the PCE does not come down, we can expect additional rate hikes of probably 25 basis points in the coming months. And Powell also pointed out that since inflation has proven rather stubborn, he doesn’t foresee any rate cuts in the next year. For the housing market in the short term, this means we will probably see a continued trend of similar interest rates in the 5-7% range. It’s important to talk to your realtor and lender about strategies that increase your purchasing power in this climate. I’m Amy Cimetta with Vista Sotheby’s Intl Realty. Don’t forget to like this post and follow me for more real estate info
The Fed’s June 14th Meeting Resulted in Another Rate Hike for Real Estate
