The Fed Declines to Raise Rates
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The Fed Declines to Raise Rates

May 3, 2017
For the second time this month, President Donald Trump has taken to Twitter in calling out the Federal Reserve to slash rates back to the December 2017 level
The Federal Reserve has decided that now is not the right time for another rate hike.
 
In a unanimous vote, the central bank’s Federal Open Market Committee (FOMC) stated that “economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
 
The Fed added that it will continue with its longstanding policy of “reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way.” 
 
“Today’s FOMC decision is only a short-term, temporary pause. With no change in monetary policy, mortgage rates look to remain within the narrow band of four percent to 4.5 percent for the foreseeable future," said National Association of Realtors (NAR) Chief Economist Lawrence Yun. "However, the future path of rate hikes and changes in bond purchase levels will depend upon inflationary pressures. Without adequate increases in new housing production, both rents and home prices will accelerate, and therefore complicate the Fed’s desire for full employment and price stability.”

 
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