Mortgage Rates to Remain High Following Federal Reserve’s Recent Decision
Mortgage rates will likely stay elevated over the next several months, following the Federal Reserve’s decision on Wednesday, June 12. The Federal Reserve maintained interest rates at a 23-year high, holding the benchmark rate at 5.25% to 5.5%, according to Yahoo! Finance. This rate has been consistent since July 2023. The Fed also revised its forecast for rate cuts this year, reducing the expected cuts from three to one. The decision was closely contested, with eight officials expecting two cuts, seven predicting one cut, and four seeing no cuts.
Additionally, the Fed raised its 2024 inflation outlook, predicting that the Personal Consumption Expenditures (PCE) index will reach 2.8%, up from its previous estimate of 2.6%. Despite this, the Fed's policy statement shows a hint of optimism.
Instead of stating that "there has been a lack of further progress towards the committee’s 2% inflation objective," the statement asserted that "there has been modest further progress" toward that goal. Still, officials reiterated in their statement they need to see confirmation in the outlook for inflation returning to the Fed 2% target before cutting rates.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," the statement read.