At the June Federal Open Market Committee meeting, Fed Chairman Jerome Powell announced that the Fed is holding rates steady between the 5.25% and 5.5% range, the highest mark in two decades. The Fed further announced only one guaranteed rate cut this year, indicating that despite lowering inflation, it is in no hurry to lower rates. Following the meeting, Marty Green provided his thoughts on what the Fed’s announcement means for the residential real estate and mortgage market.
“While the combination of a more benign inflation reading for May and the recent rate reductions by both the Canadian and European central banks gave markets optimism that the Fed would have enough comfort to begin reducing the discount rate in the U.S. later this summer or early fall, the Fed reminded everyone that it will be patient and act only when the data indicates more sustainable progress toward its 2% inflation target,” Green said.
Green added: “The earliest markets should expect any rate relief is September, and it looks unlikely that we will see more than two rate cuts in 2024. For beleaguered consumers and the housing sector, the Fed’s patience may not seem much like a virtue.”