Federal Reserve To Start Forecasting Interest Rates

Starting soon, the Federal Reserve will let you know beforehand when they believe interest rates will rise.

From here forward, each member of the Federal Open Market Committee will provide an interest rate forecast for the fourth quarter of the year and for the next few calendar years, when the Federal Reserve publishes its economic projections.

The FOMC releases the projections four times a year. With the next meeting scheduled for January 24th through 25th, we should soon be hearing directly from the Federal Reserve on certain key interest rates.

In addition, each Federal Reserve official will also publish when he or she expects the first increase in the federal funds rate, according to minutes from the FOMC December meeting. The Federal Reserve has kept the rate near zero since December 2008.

There is no doubt that rates will rise at some point, but if the information is accurate, it will be nice to know before these rates actually rise, so that consumers can react accordingly.

While short-term federal funds rate are not directly tied to mortgage rates, they do influence mortgage rates, as do many other actions of the Federal Reserve.

When the Federal Reserve decides to raise its target for the federal funds rate, investors normally view that as an indication that the economy is strengthening and that may lead to higher mortgage rates.

Though, in the short term we do not see a major upward move on the horizon for interest rates.

As always we will provide updates as these forecasts are provided and shape the mortgage marketplace.