The Federal Open Market Committee unanimously voted to maintain the target range for the federal funds rate at 0.5% to 0.75% during the first meeting of the year.
After not moving interest rates since December 2015, the FOMC finally announced an increase to interest rates in the final meeting of 2016.
The December 2016 meeting raised the target range for the federal funds rate from 0.5% to 0.75%, which is where the federal funds rate still sits.
According to the Federal Reserve press release, “Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate stayed near its recent low.”
“Household spending has continued to rise moderately while business fixed investment has remained soft. Measures of consumer and business sentiment have improved of late. Inflation increased in recent quarters but is still below the Committee’s 2% longer-run objective,” the release stated.
The February meeting marked the first of eight scheduled meetings for 2017.
The December 2016 meeting issued an updated “dot plot,” which implied three expected rate hikes for 2017.
However, Doug Duncan, chief economist at Fannie Mae, noted at the time that the industry shouldn’t give this projection too much weight, given that, at one point, the dot plot signaled four rate increases in 2016 versus the one that actually materialized.
Jason Obradovich, New American Funding executive vice president of capital markets, explained in an later interview with HousingWire that for all its intentions, the Fed probably won’t be raising rates as much as it would like in 2017.
“The Fed has been trying to raise rates for several years in a row and they’ve only done it one time per year, and in December of all months,” Obradovich said. “They literally waited until the very last moment of each year to raise rates.”
