Shelter Six:  The Fed Bumps up Rates .25% but Inflation Remains Tame

October 1, 2018 by · Leave a Comment 

1. As expected, the Federal Reserve raised the Fed Funds Rate by .25% last week.  The next rate hike is expected in December.

2. The only surprise at the Fed’s post-meeting press conference was a favorable comment from Fed Chair Powell that Fed officials don’t see inflation spiking more than expected.

3. Following Powell’s comment and right on cue, Friday’s big inflation report came in exactly at the Fed’s stated target level of 2% higher than a year ago.

4. Consumer Confidence is also very strong hitting its highest reading since September 2000 thanks to a healthy labor market and a surging stock market.

5. August home prices were up 5.8% in Metro Atlanta from a year ago, slightly less than the 6% national pace, according to S&P Corelogic Case-Shiller Index.

6. Metro Atlanta home prices are now up 8.1% since the recession peak of 2007 and 78.8% since the low point in 2012.

Rate Update

Last week’s Fed meeting and inflation data were both favorable for mortgage rates leading to a drop in rates from the previous week’s highest point in seven years.

This Week

The ISM National Manufacturing Index will be released on Monday, the ISM National Services Index on Wednesday, and Employment figures on Friday.