Chicago's Mortgage Choice - June 19, 2018 Real Estate Report - The Fed's Announcement

As expected, the Federal Reserve Board's Open Market Committee met last week and announced that they would be raising short-term rates by 0.25%. Since the move was anticipated, there was no major reaction by the markets, excepting for the usual increase in rates in anticipation of the decision and subsequently a little easing as the meeting grew closer. This was the seventh time the Fed had raised rates by 0.25% in the past three years during their period of rate "normalization" from the historic lows of the recession and slow recovery. The big concern for the markets was the statement which accompanied the announcement. As usual, the markets were looking for an assessment of the economy, as well as hints of the pace of future rate increases this year. It seems that the members of the committee are ready to continue increasing rates as much as two more times this year. Some were searching for a hint that rates are coming close to what the Fed considers a normalized level, but that was nowhere to be found. As we have discussed previously, it is an open question where that level is located. When the Fed defines that level, then we will have a better idea of where rates will eventually settle if the economy does not falter. There was one more important meeting last week. This was the summit with North Korea. Though it was not expected that any breakthroughs were to come from this meeting, it was expected that a positive process would begin. Certainly, the statements made after the meeting were quite hopeful and the meeting itself was a breakthrough. Between international trade and other tensions in the spotlight this year, there has been a lot of caution in the markets contributing to the volatility we have seen. Any easing of tensions could be helpful in this regard. Keith Stewart 773-529-7000