{"id":159334,"date":"2023-09-29T15:04:00","date_gmt":"2023-09-29T21:04:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=159334"},"modified":"2024-02-29T17:50:13","modified_gmt":"2024-03-01T00:50:13","slug":"september-2023-fomc-meeting-recap","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/september-2023-fomc-meeting-recap","title":{"rendered":"Tracking the Fed: When Should We Expect the Next Rate Hike?"},"content":{"rendered":"\n

The Federal Reserve Open Market Committee\u2019s (FOMC) September meeting went as expected. The central bank group opted to forgo a hike in its benchmark rate this month\u2014the first time in the last 12 meetings\u2014instead, keeping its rate at the current target range of 5.25% to 5.5%. <\/span><\/p>\n\n\n\n

That was good news for investors, who have had to deal with the resulting <\/span>higher mortgage rates<\/span><\/a> for the better part of a year now. Since the Fed started increasing its benchmark rate back last March, the average mortgage rate has jumped from under 4% to the 7.19% it is today, significantly increasing borrowing costs for anyone buying real estate.<\/span><\/p>\n\n\n\n

Still, while the Fed didn\u2019t raise rates this time around, that doesn\u2019t mean they won\u2019t in the future\u2014especially with two more meetings on the bank\u2019s docket this year.<\/span><\/p>\n\n\n\n

What can you expect for interest rates moving forward? Here\u2019s what Fed Chair Jerome Powell and Co. have indicated.<\/span><\/p>\n\n\n\n

What the Fed\u2019s Saying<\/span><\/h2>\n\n\n\n

The Fed has been trying to reach that magic 2% inflation rate for a while now, and so far, it\u2019s made some progress. Since beginning rate hikes in March 2022, the country\u2019s inflation rate has fallen from over <\/span>9% to 3.7%<\/span><\/a> as of August.<\/span><\/p>\n\n\n\n

\u201cSince early last year, the FOMC has significantly tightened the stance of monetary<\/span><\/p>\n\n\n\n

policy,\u201d Fed Chair Jerome Powell said in a <\/span>press conference<\/span><\/a>. \u201cWe have raised our policy interest rate by 5.25 percentage points and have continued to reduce our securities holdings at a brisk pace. We have covered a lot of ground, and the full effects of our tightening have yet to be felt.\u201d<\/span><\/p>\n\n\n\n

That last part is key because economic indicators\u2014and the moves the Fed makes based on them\u2014tend to lag, so the FOMC can\u2019t really judge how well it\u2019s doing until a few months down the road. For this reason, the Fed is taking things slow\u2014making small rate hikes, letting the data trickle in, and then reanalyzing from there. Powell has even said the FOMC is going to take things \u201ccarefully\u201d going forward.<\/span><\/p>\n\n\n\n

\u201cGiven how far we have come, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,\u201d Powell said. \u201cWe will continue to make our decisions meeting by meeting, based on the totality of the incoming data and their implications.\u201d<\/span><\/p>\n\n\n\n

What Will the Fed Do Next?<\/span><\/h2>\n\n\n\n

So we know the Fed is taking it slow\u2014assessing the data and aiming to avoid any prolonged pain that higher interest rates could bring about. What could that approach look like over the next few months, though?<\/span><\/p>\n\n\n\n

\u201cThe process of getting inflation sustainably down to 2% has a long way to go,\u201d Powell said. \u201cWe are prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we are confident that inflation is moving down sustainably toward our objective.\u201d<\/span><\/p>\n\n\n\n

According to the FOMC\u2019s latest projections, the majority of its members agree with Powell, believing further action is needed to hit that 2% rate. As shown in the projections table, 12 members believe we need a target rate of 5.5% to 5.75% by the end of this year\u201425 basis points higher than today\u2019s rate\u2014while seven think the current range is adequate.<\/span><\/p>\n\n\n\n

The CME Group\u2019s Fed Watch Tool, which uses investment activity to predict future rates, currently shows there\u2019s a higher likelihood of a rate hike at the FOMC\u2019s December meeting than its November one.<\/span><\/p>\n\n\n\n

While all this is up in the air right now, it\u2019s clear the Fed aims to keep rates fairly high for the foreseeable future. In 2024, 10 members say they\u2019re eyeing a target rate of 5% or above, and nine see rates in the 4% to 5% range. Beyond that, the FOMC isn\u2019t planning any significant rate drops until 2025 or later.<\/span><\/p>\n\n\n\n

Case in point, a reporter asked Powell if today\u2019s rates were \u201csufficiently restrictive\u201d yet. <\/span><\/p>\n\n\n\n

As Powell put it, \u201cWe want to see convincing evidence, really, that we have reached the appropriate level. We’re seeing progress, and we welcome that. But we need to see more progress before we’ll be willing to reach that conclusion.\u201d<\/span><\/p>\n\n\n\n \n

\n \n\n
\n \n\n
\n
\n \n\n

Get the Best Loan Today<\/p>\n\n\n\n

Find trusted, investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n

<\/p>\n\n\n\n

\n Find a Lender<\/a>\n <\/div>\n\n <\/main>\n <\/div>\n\n
\n \n <\/div>\n <\/div>\n<\/div>\n\n <\/div>\n \n\n\n
\n \n
\n \n\n
<\/div>\n\n\n\n
\n \n\n
\n
\n \n\n

Join the community<\/h3>\n\n\n\n

Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n

\n Sign Up<\/a>\n <\/div>\n\n <\/main>\n <\/div>\n\n <\/div>\n<\/div>\n\n\n
<\/div>\n\n\n <\/div>\n <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

The latest Fed meeting didn’t feature a rate increase, but what’s in store for the next one? What’s the current mortgage outlook?<\/p>\n","protected":false},"author":613679,"featured_media":159336,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7383],"tags":[],"class_list":["post-159334","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/159334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=159334"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/159334\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/159336"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=159334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=159334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=159334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}