The Fed Institutes a Rate Hike, Signals Two More This Year
March 15, 2017
As predicted, the Federal Reserve has just raised its benchmark Federal Funds rate, upping its target by 0.25 percent (25 basis points) and signaling expectations for another two quarter-point increases by the end of the year.
The Fed dropped the benchmark rate 5 percentage points between August of 2007 and the end of 2008, a move which helped drive mortgage rates down to an all-time low of 3.31 percent in 2012. The Fed has since raised its target rate by a total of 0.75 percent.
The current average rate for a 30-year mortgage was running around 4.21 percent as of mid-last week with the probability of a rate hike this week likely already priced-in.
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And . . . bonds rallied on the news, with the interest rate on the 10-year falling 3.35%, from 2.59% to less than 2.51%.
Can’t have that, expect some hawkish jawboning soon.
UPDATE: The Fed Raises Rates, Signals Another Hike This Year