As
expected
by
virtually
all
market
participants,
the


Federal
Reserve
maintained
its
short-term
policy
interest
rate
between
5.25%
and
5.5%
at
its
June
meeting
that
concluded
Wednesday
afternoon.

That’s
the
seventh
consecutive
time
policymakers
with
the

Federal
Open
Markets
Committee
(FOMC)
kept
the
rates
unchanged,
reflecting
mixed
signals
from
the
leading
U.S.
economic
data.

Job
creation
came
in
stronger
than
expected
in
May,
but
inflation

slowed
slightly.

For
mortgage
companies,
today’s
Fed
decision
means
that
rates
for
home
loans
will
remain
at

higher
levels
for
longer.
Following
the
release
of
inflation
data
on
Wednesday
morning,
the
30-year
fixed
rate
for
conforming
loans
was
at
7.19%,
according
to


HousingWire’s
Mortgage
Rates
Center.

All
eyes
are
now
on
the
Fed’s
next
moves.
Officials
no
longer
expect
three
rate
cuts
for
2024,
as
indicated
in

March,
but
two
or
possibly
one
since
more
evidence
of
a
cooling
economy
is
needed.

Monetary
policy
watchers
believe
there
is
an
85.5%
chance
of
rates
staying
unchanged
in
July,
along
with
a
72.7%
chance
of
a
rate
cut
in
September,
according
to
the

CME
FedWatch
Tool,
which
measures
the
likelihood
of
changes
to
rates
at
upcoming
meetings. 

Fed
officials
have
consistently
stated
that
economic
data
drives
their
decisions. 

In
May,
the
U.S.
economy
added
272,000
jobs,
above
the
market
consensus
estimate
of
180,000,
per

data
released
by
the


U.S.
Bureau
of
Labor
Statistics.
But
the
unemployment
rate
was
at
4%,
the
highest
level
since
January
2022
and
up
from
3.7%
one
year
earlier.

Meanwhile,
the
Consumer
Price
Index
(CPI)
cooled
slightly
in
May,
with
the
all-items
index
posting
a
3.3%
annual
increase
before
seasonal
adjustment,
down
from
3.4%

in
April.
On
a
month-over-month
basis,
inflation
remained
flat,
marking
the
first
month
without
an
increase
since
July
2022.
In
April,
the
index
posted
a
month-over-month
increase
of
0.3%. 

“It’s
the
full
economic
picture,
not
a
singular
factor,
that
will
guide
their
decision,”

First
American
deputy
chief
economist
Odeta
Kushi
said
in
a
statement.

“The
FOMC
will
hold
off
on
making
any
changes
to
the
federal
funds
rate
until
inflation,
and
the
factors
that
drive
inflation,
such
as
a
more
balanced
labor
market,
make
significant
and
sustained
progress
toward
the
Fed’s
target,
or
there’s
a
significant
decline
in
economic
activity
or
worrisome
weakness
in
the
labor
market.”

According
to
Kushi,
the
FOMC
rate
announcement
itself
is
unlikely
to
significantly
impact
mortgage
rates,
but
a
more
hawkish
tone
than
markets
anticipate
can
move
them
up
further,
or
vice
versa.

Realtor.com
chief
economist
Danielle
Hale
said
that
“there
are
ample
data
points
for
both
sides
to
factor
into
the
debate”
of
where
rates
should
be.

“Although
recent
inflation
and
labor
market
data
have
raised
questions
about
whether
additional
increases
in
the
Fed’s
rate
are
necessary,
I
still
expect
the
current
rate
to
be
sufficiently
restrictive
to
bring
inflation
back
to
2%,”
Hale
said. 

“For
home
shoppers
and
sellers,
I
expect
that
peak
mortgage
rates
likely
remain
in
the
rearview,
but
volatility
remains
a
risk,
complicating
moving
decisions
for
home
sellers,
homebuyers,
and
renters
alike,”
she
added.

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