The Federal Reserve on Wednesday increased its short-term interest rate from 2 percent to 2.25 percent, the third rate hike this year. In a press release, the central bank said the rise is due to strong job gains, low unemployment rates, and robust household spending and business fixed investment.
“On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent,” read the report. “Indicators of longer-term inflation expectations are little changed, on balance.”
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability,” the release added. “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term.”
In an emailed statement, Keller Williams senior economist Ruben Gonzalez says the uptick in long-term Treasuries have, and will continue to result in higher mortgage rates, which may lead to weakened buyer demand, especially on the lower end of the market.
“Mortgage rates have been trending up, reflecting the recent movement in long-term treasuries,” Gonzalez said. “The same flat trend in long-term treasuries that’s led to concerns around the flattening of the yield curve has also resulted in a fairly flat trend in mortgage rates since April.”
This is a developing story. Check back for updates.