The Feds Statemens in Plain English

Reblogger Stephanie/Bob The Ruiz/Miller Team
Real Estate Sales Representative with Keller Williams Cornerstone Realty

Bill does a great job boiling down the FED statement yesterday to just a few lines of plain English.  We wonder why the FED can't do this?  We guess then they wouldn't have "earned" their big bucks! lol  Thanks Bill!

Original content by The Condo Guy Bill Desautels
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Putting the FOMC statement in plain EnglishThe Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent Thursday. For the eighth consecutive meeting, the vote was nearly unanimous.

Just one FOMC member, Richmond Federal Reserve President Jeffrey Lacker, dissented in the 9-1 vote.

The Fed Funds Rate has been near zero percent since December 2008. 

In its press release, the Federal Reserve noted that the U.S. economy has been expanding "at a moderate pace" in recent months, led by growth in household spending. However, "strains in global financial markets" remain a significant threat to growth in the near-term, a remark made in reference to the Eurozone and its sovereign debt and recession issues.

The Fed's statement also included the following economic observations :

  1. Growth in employment has been slow with unemployment elevated
  2. Inflation has been subdued, despite rising gas and oil prices
  3. Business spending on equipment and structures has slowed

In addition, the Fed addressed the housing market, stating that there have been signs of improvement, "albeit from a depressed level".

The biggest news to come out of the FOMC meeting, though, was the launch of the Fed's third round of quantitative easing (QE3).

QE3 is a program by which the Federal Reserve will purchase $40 billion in mortgage-backed bonds monthly, with no defined "end date" for the program. So long as the Fed believes that the market needs support, it will keep QE3 in place.

In the near-term, QE3 is good for rate shoppers and home buyers. With the Fed in line to buy $40 billion in mortgage bonds each month, demand for bonds is expected to remain strong which, all things equal, leads mortgage rates lower.

We're seeing this already today. Mortgage pricing is improving post-FOMC, with rates nearing their lowest levels of the week.

The Fed also used its meeting to announce that it intends to hold the Fed Funds Rate near its target range of 0.000-0.250 percent until mid-2015, at least. At its last meeting, the Fed has marked an end-date of "late-2014".

The FOMC's next scheduled meeting is a two-day event, October 23-24, 2012.

posted by Bill Desautels
P: (802) 655-9100 (800) 639-4520 x217 F: (802) 655-0400 E: condoguy@condoguy.com
The Condo Guy - Vermont condo real estate
The Condo Guy has been providing advice to buyers
and sellers of Vermont condos real estate
for nearly 30 years.
posted by Bill Desautels
P: (802) 655-9100 (800) 639-4520 x217 F: (802) 655-0400 E: condoguy@condoguy.com
The Condo Guy - Vermont condo real estate
The Condo Guy has been providing advice to buyers
and sellers of Vermont condos real estate
for nearly 30 years.
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Rainmaker
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Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Keeping the rates low gives buyers who need to clean up their credit after losing a home to start over.  Trying to see the good news in all this!

Sep 14, 2012 10:46 AM #1
Rainmaker
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Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Thanks Joetta, we agree it definitely prolongs the great buyers market in decades.

Sep 14, 2012 11:29 AM #2
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Rainmaker
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Stephanie/Bob The Ruiz/Miller Team

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