Market Update: Fed to hold steady, keep rates near zero
Quick summary of the Fed’s July meeting:
As was expected, the Federal Reserve voted to leave interest rates unchanged at its July meeting while also pledging to do all it can to support the US economy. The central bank voted unanimously to leave the Federal Funds rate at or near zero, and also indicated it intends to hold steady on interest rates “until it is confident that the economy has weathered recent events.”1
In assessing the current environment and the outlook moving forward, the Fed made clear that while economic conditions overall have improved since their low point in March, economic activity and employment “remain well below their levels at the beginning of the year.”2
While it continued its pledge from June to use its full range of tools to aid the economy, the Fed also made clear that the “path and pace of recovery will depend significantly on the course of the virus,”3 and the ability of states to contain the virus in order to help resume economic activity.
What it could mean for you:
Rates to remain low—making it a great time to refinance
The Fed’s efforts to inject liquidity into the financial system through bond purchases is likely to help keep mortgage rates low. Today’s historic low rates make now a great time for a mortgage review to see if you could save money each month.*
Loans could become harder to come by
Because of concerns about the long-term effects of the pandemic many banks are tightening credit standards for certain types of financing, meaning it could be harder for some borrowers to get approved.4
The rewards for pinching those pennies will be lower
Because they set their rates off of Fed targets, the interest rates for savings accounts and CDs (which are already low) aren’t likely to increase any time soon—which unfortunately penalizes savers.5
* Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Guaranteed Rate, Inc. for current rates. Restrictions apply.