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The most highly anticipated Fed meeting in years contained good news for mortgage rates. As a result, mortgage rates ended the week lower.
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Heading into Thursday's Fed announcement, investors were split about whether the Fed would raise the federal funds rate for the first time since 2006. The Fed chose to make no change. The Fed's Statement cited concerns that weaker global economic growth could exert downward pressure on U.S. inflation rates. Fed officials lowered their forecasts for inflation for the next several years.
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Mortgage rates fell following the comments from the Fed. They fell because expected future inflation levels are a key component in setting mortgage rates. The Fed's guidance lower made investors willing to accept lower rates.
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In addition, investors were comforted by another inflation reading which was consistent with the Fed's guidance. The consumer price index data (CPI) released this week revealed that core CPI inflation, which excludes volatile food and energy prices, was again just 1.8% higher than a year ago. Inflation has held steady at low levels all year.
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Looking ahead, Existing Home Sales will be released on Monday. Durable Orders, an important indicator of economic activity, and New Home Sales will come out on Thursday. The third estimate for second quarter GDP will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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