Federal Reserve Predicts No Rate Increases in 2019
Wednesday March 20, 2019–The Federal Reserve’s two day meeting concluded with concerns about economic growth slowing down. The Fed decided not to change interest rates on Wednesday, and there are no indications that they’ll be raising them in the near future.
The White House and the Fed hold opposing views on economic projections for the next two years. The White House insists we’ll see a 3.2 percent growth this year, followed by 3 percent next year. The Fed holds a more conservative view, predicting 2.1 percent economic growth for the remainder of 2019, and 1.9 percent for 2020.
2019 outlook remains steady
Based on the economic growth projections, the Fed has signaled they’ll not increase rates for the first time in five quarters. As shown on the forecasting data linked above, the majority members of the Federal Open Market Committee do not expect to raise rates at all this year. Furthermore, the forecasting chart indicates most members only a slight increase in rates over the next two years.
The Fed still expects the economy to grow at a solid pace in 2019, but the pace will be slower than last year. In a news conference after the meeting, Fed Chairman Jerome H. Powell stated that the data from the time of the last forecasts in December through present date “suggest that growth is slowing somewhat more than expected.”
Will there be a rate cut?
While the majority of committee members do not forecast rate increases, this doesn’t mean there are any rate cuts on the immediate horizon. The projections provided at the end of Wednesday’s meeting do not currently show any members projecting rate cuts.
What does this mean for mortgages?
It is too early to determine the exact impact this will have on mortgage rates. In general, the expectation is that we might see a slowdown in the previously steady incremental increase in rates. Please contact your mortgage banker to discuss this further, and to find out how it might impact your specific financial situation.
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