08/24/2024
Economic news this week – The big news this week was Federal Reserve Chairman, Jerome Powell’s comments at the Fed’s annual Jackson Hole Conference. In his speech he said, “The time has come to cut interest rates.” He further stated that inflation had moderated and was heading toward the Fed’s 2% annual target. Stocks rallied on the news. Many experts feel that there will be a .25% drop in September, perhaps a .50% in November, and a 25% drop in December. That’s a 1% drop by year’s end. Others feel that there will be three 25% drops, totaling a .75% drop by year’s end. Either way, it’s great news for loans tied to short-term rates. HLOC line of credit loans are often tied to prime. Prime rates normally follow Fed rate movements. While HLOC loans will come down the same amount that Fed rates do, long-term mortgage rates will not. Mortgage rates typically follow long-term bond rates. We expect mortgage rates to drop, but not anywhere near the amount that Fed rates drop. In other news, the number of new jobs created over the past year was revised downward by 818,000 jobs, therefore U.S. job growth has been far weaker than initially reported. This was another consideration in the Fed’s decision to announce a shift to rate cuts.
Economic news this week – The big news this week was Federal Reserve Chairman, Jerome Powell’s comments at the Fed’s annual Jackson Hole Conference. In his speech he said, “The time has come to cut interest rates.” He further stated that inflation had moderated and was heading toward the F...