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The Fed and Lower Rates

After the Fed’s meeting last week, we saw bond pricing improve which has pushed interest rates even lower.  The Fed has decided to keep the Fed Funds rate unchanged.  They also discussed no need to increase rates at this time, and even mentioned the idea of lowering it. 

The Fed has a dual mandate: keeping inflation near 2% and maintaining healthy job growth.  Because inflation is currently lower, actually at 1.5%, which was reported on May 31st in the PCE report, the Fed may open the appetite for lending money by decreasing the Fed Fund Rate.  Fred Bullard, St. Louis Fed President, actually voted against the national Fed decision and actually wanted a rate cut by a quarter percent, while the other members voted to keep the rate unchanged.  Bullard said, a rate cut “may be warranted soon”.   Analysts are also saying that even though there wasn’t a rate cut during this meeting, they are seeing the possibility of a rate cut as soon as the next meeting in July. 

With the current outlook of the economy and pending recession, rates are very attractive and moving lower.  This is a great time to start thinking about refinancing or purchasing a home.

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Source: https://on.wsj.com/2ZClpCK