Patience Pays Off

The Federal Open Market Committee is taking it slow in determining the future adjustments to the federal fund rates.The Fed’s monetary policy is reacting on the conservative side but the ooutcome will be a positive for the 2019 housing market.

The first month of the year the Committee agreed to hold steady the federal funds top rate at 2.5%. The Federal Open Market Committee is taking a more flexible approach this year according to Fed’s January 2019 statement.

The January 2019 statement concluded that the Fed will “be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.” This peaceful approach is different from the Fall of 2018 and is more than likely the reaction to the inflation expectations and some of the sluggish economic sectors.

The Fed will look at modifying its ongoing balance sheet reduction which will ultimately lead to higher rates. This decision which will reduce its net holding of Treasury bonds and mortgage-backed securities and will only be implemented if the economic conditions call for this kind of change.

 

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