Susan Deierling, Assoc. Broker
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Tag Archives: Fed Minutes
The Federal Reserve released its October Federal Open Market Committee (FOMC) meeting minutes last week, revealing a Fed in disagreement about the future of the U.S. economy and about what, if any, stimulus may be warranted in the next 12 months.
The “Fed Minutes” recaps the conversations and debates that transpire during an FOMC meeting, and is published 3 weeks after the meeting adjourns.
According to the October minutes, FOMC members “generally agreed” that a housing recovery is under way nationwide, citing increased housing prices, higher sales volume, and rising construction in many parts of the country.
FOMC members made no major policy changes at their last meeting, but agreed that a continuation of additional asset purchases would likely be necessary in 2013, in order to achieve a substantial improvement in the labor market.
Other notes from within the Fed Minutes included:
- On housing: Signs of improvement are “encouraging”, and mortgage rates are at historic lows
- On inflation: Essentially “unchanged”, notwithstanding recent increases in energy prices
- On Europe: Production indicators signal contraction in business activity and expansion
- On employment: Employment is rising, and unemployment remains high
The economic forecast prepared by the FOMC staff shows an uptick in consumer spending, residential construction, and labor market conditions which more than offset recent downgrades in the business fixed investment and the industrial production outlooks.
Through 2013, economic activity is projected to accelerate gradually, supported by a lessening in fiscal policy restraints. The Fed also anticipates that Cottonwood home buyers will benefit from looser credit standards.
Low mortgage rates are helping home buyers, too.
According to Freddie Mac, the average 30-year fixed rate mortgage rate was 3.34% last week, down from 3.55% in September. This has given a boost to buyer purchasing power nationwide and the year-end housing market may reflect it. Demand for homes remains strong.
The next FOMC meeting is scheduled for December 11-12, 2012.
The minutes from the Federal Reserve’s September Federal Open Market Committee meeting were released Thursday.
The Fed Minutes detail the discussions and debates which shaped the central banker’s launch of its third round of qualitative easing since 2008. The minutes also give Wall Street insight into future monetary policy.
Despite its large word count, there was very little that was new or surprising in the Fed Minutes, though. This is because, since the Fed’s last meeting, Federal Reserve Chairman Ben Bernanke has publicly clarified and re-iterated the Fed’s positions on employment, housing and inflation.
The minutes provide a strong backdrop to his comments, however.
For example, with respect to the jobs market, Fed members deemed employment “disappointing”, noting that growth in payrolls has been slower in 2012 as compared to 2011, and that the expansion rate of today’s job market is too slow to make significant progress against the national unemployment rate.
The Fed Minutes also included the following notes :
- On housing : Further improvement is occurring, albeit from a “depressed level”
- On inflation : Risks appear “tilted to the downside”, but energy costs pose risks
- On Europe : A “slight improvement”, but still a risk to global economic activity
Of greatest interest to home buyers in Cornville and rate-shopping refinancers, though, was the Fed’s discussion of its QE3 program. The program was introduced to help suppress mortgage rates nationwide which, the Fed believes, will make “broader financial conditions” more accommodative.
The Fed plans to purchase $40 billion in mortgage-backed bonds monthly for a “considerable” period of time after the U.S. economy has already shown signs of full recovery and, since the launch of QE3, 30-year fixed rate mortgage rates are down 19 basis points to 3.36% nationwide, on average.
The next Federal Open Market Committee meeting is scheduled for October 23-24, 2012.
Eariler this week, the Federal Reserve released the minutes from its 2-day meeting which ended August 1, 2012. Since the release, mortgage rates have dropped.
The Fed Minutes are released on a schedule, three weeks after the FOMC adjourns from one of its 8 scheduled meetings of the year.
The Fed Minutes are meeting minutes; like you’d see after a corporation shareholder meeting, or after a condo board meeting. Specifically, the Fed Minutes details the conversations among Federal Reserve members which shape our nation’s economic policy.
The most recent Fed Minutes show a central bank closer to adding new market stimulus that previously believed.
At its last meeting, the Federal Reserve’s debate focused on the rate of economic growth and whether it was occurring too slowly to be long-lasting. The Fed appears to think so. Without a “substantial and sustainable strengthening” in the pace of economic expansion, it said, additional monetary stimulus would be “warranted fairly soon”.
Other notes from within the Fed Minutes included :
- On employment : Unemployment rates will “decline only slowly”
- On housing : The market appears “to have improved, somewhat”
- On inflation : Retail energy costs are keeping consumer prices low
However, the Fed expressed an “unusually high level of uncertainty” about its assessments owing to the ongoing European sovereign debt problems. “Spillovers” remain possible and default threats continue to weigh on markets.
The Federal Reserve’s next scheduled meeting is September 12-13, 2012.
Since the minutes were released — and for the first time this month — mortgage rates in Arizona made a big move lower. This is in contrast to the rest of August through which mortgage rates have climbed steadily.
According to Freddie Mac, on August 1, the average 30-year fixed rate mortgage rate was 3.49% nationwide. Today, the rate is 3.66%. Between now and the Fed’s next policy-making meeting September 13, though, mortgage rates are subject to change. If today’s mortgage rates fit your budget, consider locking in.
The Federal Reserve released the minutes from its June Federal Open Market Committee meeting, revealing a Fed divided on the future of the U.S. economy. Mortgage rates are higher after the release of the minutes.
The Fed Minutes is the detailed recap of an FOMC meeting. It is the companion piece to the more brief, more well-known post-meeting FOMC press release.
For a comparison, whereas the Fed’s June 20, 2012 press release contained 5 paragraphs and 490 words, the same meeting’s minutes contain 62 paragraphs and 7,508 words. The extra detail afforded by the extra words Wall Street gives insight into the nation’s central banker.
The June Fed Minutes, for example, suggest that the Fed may soon add new economic stimulus.
Recent data suggests that the U.S. economy is expanding, but more slowly that it was at the start of the year. The Fed acknowledged that this, in part, is the result of “below-trend” growth in Euro-area economies, plus a general slowdown in China.
The Fed also said that “strains in global financial markets” continue to pose “significant downside risks” to the U.S. economy. The Fed expects U.S. growth to “moderate over coming quarters”.
Other notes from with the Fed Minutes included :
- On housing : Home sales, construction and prices suggest improvement
- On inflation : Prices are stable, and inflation will remain “subdued” through 2014
- On new policy : Rapid fiscal tightening poses a “downside risk” to the economy
In addition, there was discussion about whether the Fed is missing its dual mandate of low inflation and low unemployment. Several Fed member discussed the need for new stimulus to raise employment and to raise the rate of inflation. This action could occur as soon as next month.
If the stimulus was enacted, mortgage rates would likely rise because inflation, in general, is a threat to low mortgage rates.
The next Federal Open Market Committee meeting is a 2-day affair scheduled for July 31-August 1, 2012.
The Federal Open Market Committee released its April 2012 meeting minutes this week, revealing a Federal Reserve in the ready in the event additional monetary stimulus is needed.
The Fed Minutes function much like the minutes from a business meeting; or, condominium association meeting, for example. It’s a detailed review of the conversations and debates between FOMC members, and is typically published 3 weeks after a Federal Reserve meeting.
The Fed Minutes is a follow-up statement on the FOMC’s more well-known, post-meeting press release. It’s also much more lengthy.
Those extra words are important, too, because the detail offered within the Fed Minutes lends insight into how our nation’s central bank views the U.S. economy, its strengths and weaknesses, and its threats.
From the Fed Minutes, some of the Fed’s comments includes :
- On employment : Unemployment may remain elevated through 2014
- On housing : Tight underwriting is “holding down” the housing market
- On rates : The Fed Funds Rate should remain low until late-2014
There was also substantial talk about Europe and its role in the U.S. economy. Notably, U.S. financial institutions have been actively reducing their European exposure to contain damage in the event of a full-blown economic crisis abroad.
This has had the net effect of lowering mortgage rates in Arizona. Mortgage bonds often benefit from economic uncertainty.
In addition, because several Fed members acknowledged a willingness to add new stimulus to the U.S. economy, mortgage markets are accounting for the possibility it could happen. It’s unclear whether stimulus would be added after the Fed’s next meeting, or at some point later in the year, or at all.
The FOMC has its next scheduled meeting June 19-20, 2012.
The Federal Reserve has released the minutes from its last FOMC meeting, a 1-day affair held March 13, 2012. Mortgage rates in AZ are rising on the news.
For the un-indoctrinated, 3 weeks after it meets, the Federal Open Market Committee, the sub-group within the Federal Reserve that votes on U.S. monetary policy, publishes its meeting minutes.
Similar to the minutes from a corporate event, or condominium association meeting, the Fed Minutes recounts the conversations and debates that transpired throughout the meeting.
The Fed Minutes is a lengthy publication, often filling 10 pages or more. By contrast, the more well-known publication from the FOMC — its post-meeting press release — tends to span 6 paragraphs or less.
The extra detail contained within the Fed Minutes is Wall Street fodder, especially given the current economic uncertainty. Investors look to the Federal Reserve for clues about what’s next for the U.S. economy.
Lately, the minutes has made an out-sized impact on mortgage rates. The Fed’s words continue to swing the mortgage-backed bond market.
Today is no different.
March’s Fed Minutes is a dense one and markets are reacting. The text shows a central bank softly divided on future U.S. economic policy, and in debate about whether existing market stimulus should be removed.
The Fed has said that it’s expecting high levels of unemployment and low levels of inflation in the coming months, an outlook that leaves little reason to introduce a third round of stimulus. This is the primary reason why mortgage rates in Cornville have been climbing since the Fed Minutes’ release.
Since mid-March, mortgage rates dropped on speculation that the Federal Reserve would introduce a mortgage bond purchase program this quarter. Today, those expectations have reversed.
According to the minutes, the Federal Reserve believes that additional market stimulus would only be necessary “if the economy lost momentum”, or if inflation remained too far below 2 percent per year. Currently, Core PCE — the Fed’s preferred gauge of inflation — is running slightly below 2 percent.
The Federal Reserve’s next scheduled meeting is April 24-25, 2012 — its third of 8 scheduled meetings this year.