The Fed Rate Hikes and the New Normal
Hello Hampton Roads, Well I'm sure you've heard that the latest CPI numbers came out last week showing that inflation is still strong and that means more Fed rate hikes are on the way. So far this year the Fed has rasied rates 5 times in an effort to cool inflation and is expected to raise it another .75 % at its next meeting in November and also possibly in December. This increase has been the fastest pace than any other rate hike cycle. FOMC Meeting Date Rate Change (bps) Federal Funds Rate Sept 21, 2022 +75 3.00% to 3.25% July 27, 2022 +75 2.25% to 2.5% June 16, 2022 +75 1.5% to 1.75% May 5, 2022 +50 0.75% to 1.00% March 15, 2022 +25 0.25% to 0.50% Source: Forbes: https://www.forbes.com/advisor/investing/fed-funds-rate-history/ So what's this doing to housing? Everytime the Fed raises the fed funds rate, mortgage rates go up. It only makes sense that since low mortgage rates fueled the housing boom, higher rates will cool it. Rates are now in the 7% range having
