Fed Meeting Keeps Rates Low, But Expectations Lower
The Fed came out of their two day meeting with – not much. After rumors of the Fed purchasing some of the national mortgage debt, the Fed came out of their monthly meeting without any new policies, but noting that they are “keeping their options open,” as Fed Chairman Ben Bernanke put it this afternoon. The Fed also left rates unchanged again, keeping them near zero, which should keep rates at record lows to help entice new borrowers.
Fed Chairman Ben Bernanke also announced that the US Economy strengthened in the third quarter, but despite this good news, still feels that conditions could worsen depending on the European fiscal and banking issues currently taking place. With that, the Fed lowered their previous forecasts for growth and unemployment. They now believe our economy will be growing 2.5%–2.9% from the rosier 3.3%–3.7% while unemployment is forecasted to increase for 2011, 2012 and 2013, rising to 8.5%–8.7% by the end of 2012.
While rates rose slightly for the time being after today’s Fed announcement, they should be pretty low and steady as the market waits to hear from across the Atlantic what will happen with Greece and the rest of the European economy.