FOMC Cuts Rates To Target Zero

The Fed has taken Historic Action and has established a Target Range vs. a Flat Rate.
Target range for the federal funds rate of 0 to 1/4 percent.

(This should be interesting for Prime? Credit and Money is NOW Cheep. Didn’t we do this in 2001-2003?)

Given the overall decline in the U.S. Economy, the FED announced that it is determined to use every tool possible to pull the economy out of the current recession. The FED is sticking to its guns and will continue to purchase Government debt and MBS as one of the Monetary Policy Tools.

“over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant.”

Interest rates change constantly, but it is important to know that rates are cyclical. If rates are currently at historical lows then we know there is a strong probability rates will go up again, and vice versa. Certain economic indicators such as unemployment data, consumer price index, retail sales data, and consumer confidence all have an effect on mortgage interest rates. But the key factor to watch is the relationship between stocks and bonds.

As always if you are thinking of Refinancing or Purchasing feel free to contact me for your No Obligation Mortgage Plan William Doom, CMPS Your Mortgage Planner. (1.888.271.3437 x7)



Image Parsing the Fed Statement
The Wall Street Journal Online
December 16, 2008
http://online.wsj.com/internal/mdc/info-fedparse0812.htm