WEDNESDAY AFTERNOON’S UPDATE:
This week’s FOMC meeting has adjourned with an announcement that no change to key short-term interest rates were made for the fourth consecutive meeting, as was widely predicted. However, the post-meeting statement and the Fed’s dot-plot that lists each member’s predictions of where rates will be in the future clearly show there is a growing consensus that the next move will be a rate hike instead of another rate cut. This is bad news for bonds and mortgage rates because it signals their concern about inflation. When inflation is stronger, long-term securities such as mortgage bonds become less appealing to investors, leading to higher rates for mortgage shoppers.