As expected, the Federal Reserve raised interest rates today for the second time in three months, a move made
based on steady economic growth. The increase followed last Friday’s strong jobs report, which showed 235,000
payroll gains in February, as well as faster wage growth and a drop in the unemployment rate to 4.7%.
The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent
marked one of the Fed’s most convincing steps yet in the effort to return monetary policy to a more normal footing.
The Fed’s policy-setting committee did not flag any plan to accelerate the pace of monetary tightening. The
committee indicated that further rate increases would be gradual, maintaining their prior forecast for two more rate
hikes this year and three more in 2018. The Fed lifted rates once in 2016.
Mortgage rate have risen since the election but remain historically low. During the last economic expansion
from 2001 – 2007, mortgage rates hovered between 5% and 7%. In the 1990’s, rates were even higher, skirting
between 7% and 9%.
With consumer confidence high, employment strong and continued low rates, it is a good time for consumers
to consider a real estate purchase or a mortgage refinance prior to potential future rate increases.
Source: Reuters & CBS Money Watch