Eye On Housing
The construction labor market is cooling off as economic activity slows in response to tighter monetary policy per the latest job openings data. Given the Fed’s dual mandate of fighting inflation and maintaining maximum employment, macro price and jobs data are key to informing the Fed’s future policy moves. Inflation remains near a 40-year high and payroll employment growth is… Read More ›
Continuing its tightening of financial conditions to bring the rate of inflation lower, the Federal Reserve’s monetary policy committee raised the federal funds target rate by 75 basis points, increasing that target to an upper bound of 2.5%. This move matches the June rate hike as the largest increase for the funds rate since 1994. While committing to a policy… Read More ›
To fight persistent inflation, the Federal Reserve has committed to significantly cooling demand. This approach reflects a non-monetary policy failure to fix underlying supply-side challenges that are pushing up inflation. The Fed lacks policy tools to make these supply-side fixes, so it must rely on demand-side impacts to bring down inflation by reducing economic growth. Consequently, at the conclusion of… Read More ›
Following a 25 basis points increase in March, the Federal Reserve’s monetary policy committee unanimously approved a further 50 basis points increase for the federal funds target rate, the largest increase for the rate in more than two decades. The Fed also provided details for its plan to reduce its balance sheet (quantitative tightening), which will further tighten financial conditions…. Read More ›
The first of many expected Federal Reserve hikes of the short-term federal funds rate was announced today. Combined with future balance sheet runoff, these monetary policy moves will lead to higher mortgage rates in 2022 and 2023 as the Fed attempts to curb elevated inflation. As widely expected by forecasters and markets, the Fed raised the federal funds rate by… Read More ›
At the conclusion of its January policy meeting, the Federal Open Market Committee strongly signaled that it will undertake its first, post-covid increase of the federal funds rate in March. The Fed is tightening monetary policy in response to the highest inflation readings in nearly 40 years. These inflationary pressures have increased both consumer costs and businesses input costs, including… Read More ›
At the conclusion of its December policy meeting, the Federal Reserve announced changes to its outlook and projections that move monetary policy further away from the accommodative stance that has supported the economic rebound from the 2020 recession. This pivot toward tighter policy is a direct result of ongoing, elevated inflation data. Today’s announcement makes several changes to both the… Read More ›
The Federal Reserve has supported the housing market during the virus crisis, the 2020 recession, and the subsequent, ongoing recovery via asset-backed purchases (among other tools), including $40 billion a month of mortgage-backed security (MBS) purchases. These MBS purchases have held interest rates lower than they otherwise would have been. Beginning in November, the Fed will reduce the monthly volume of… Read More ›
Today’s Federal Open Market Committee announcement did not provide an explicit reference to an expected tapering of purchases of Treasury ($80 billion a month) and mortgage-backed ($40 billion a month) securities. In addition, as part of its ongoing accommodative policy stance, the Fed held its benchmark target rate near zero percent. In Chairman Powell’s press conference remarks, he stated, “The… Read More ›
The Federal Reserve held the federal funds rate at the current 0% to 0.25% range as it continues to deploy policy tools to underwrite an emerging recovery for the U.S. economy. And it will continue to provide such policy support until the crisis has passed and the economy has recovered. The Fed noted that it will continue its quantitative easing… Read More ›