Wednesday, May 10, 2006

Another Rate Hike?

Yup, you heard it right. Today's Fed meeting netted yet another quarter point to key short-term interest rates. This was the sixteenth consecutive increase. The increase was expected, so it didn't affect mortgage rates or the bond market by much. It was the post-meeting statement that raised the eyebrows and caused some knee-jerk selling in the markets and upward revisions to mortgage rates. The statement indicated that more rate hikes may be needed, depending on future economic data. This was not what analysts were expecting to hear. They wanted a stronger hint that the end is near for the increases and inflation was in-check.

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