Market Update: Rates hit new all-time low
Fed leaves rates unchanged, remains committed to supporting US economy
Quick summary of the Fed’s June meeting
As was expected, the Federal Reserve announced it will be leaving interest rates unchanged following its June meeting. The Federal Funds rate, which was slashed March 3 and March 10 in response to the coronavirus pandemic, will remain at a range of 0 to 0.25 percent.
In trying to assess the coronavirus’ impact on future growth, the Fed is projecting the US economy will shrink 6.5% in 2020 but will rebound and return to positive growth in 2021 and 2022. In the labor market, the Fed indicated they expect unemployment to remain high throughout the year, ending 2020 at 9.3 percent and potentially continuing at elevated levels for several years. 1
The Federal Reserve also maintained their commitment to the lending measures they instituted in March to provide liquidity to financial markets, stating it “is committed to using its full range of tools to support the U.S. economy in this challenging time.” 2
What it could mean for you:
Fed’s actions could help keep mortgage rates at historic lows
- This can make homeownership more affordable than ever
- Now could be a good time to get a mortgage or refinance your current mortgage
No inflation fears at the moment
- While some economists are worried the Fed’s aggressive response could spark inflation, that doesn’t seem to be the case…yet.
- Low inflation gives the Fed more leeway to leave their rates at near-zero levels 3
It’s an important time to practice good financial habits
- Given the uncertainty in the labor market, now’s as good a time as any to practice good financial habits
- If possible, pay down credit card balances or see if there are places to trim in your monthly budget