Fed Policy Statement Today

The first of eight scheduled Federal Open Market Committee meetings ends today.

Current forecasts are for no changes to the Fed Funds Rate.  We are watching the policy statement.  We’ll post an update after the meeting adjourns when we see how it will impact mortgage rates.

The post-meeting statements are brief, but highly influential.  Wall Street parses every word, every sentence, and every phrase.  The reason that the markets tend to be jittery on Fed days is that the traders typically rebalance all of their bets to get an investment edge over other traders.

Fed optimism tends to send stocks soaring at the expense of bonds.  When bonds sell-off, mortgage rates go higher.  If the Fed mentions lingering economic concerns, stocks can lose and bonds typically win.  This pushes interest rates lower.

Related posts

• Loan Rate Predictions | Week of March 15, 2010
• First Time Homebuyers – Tick Tock
• Fed Meetings = Mortgage Rate Changes
• Fed Meeting and Interest Rates
• A Simple Explanation Of The Federal Reserve Statement (January 27, 2010 Edition)