Fed officials expected to keep rates steady

 

WASHINGTON – May 1, 2017 – Federal Reserve officials are likely to keep interest rates steady at their policy meeting this week and drill down into details about when and how to reduce their large holdings of mortgage and Treasury securities. The short-term interest rate decisions generally impact fixed-rate mortgages and other flexible debt, but they have only an indirect impact on fixed-rate mortgages.

The challenge in the Fed's post-meeting policy statement – their official explanation on the current economy – will be to acknowledge the handful of disappointing economic growth indicators since officials last gathered in mid-March, without suggesting they're ready to veer from the policy path they sketched out at recent meetings.

The two-day policy meeting begins Tuesday. Officials raised interest rates at the March meeting to a range between 0.75 percent and 1 percent, and they penciled in two more quarter-percentage point increases this year.

The Fed also believes it's on course to signal late this year that they'll begin winding down their securities portfolio, which could potentially have an impact on long-term mortgage rates.

Source: Wall Street Journal (05/01/17) Timiraos, Nick

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