Industry News

Fed hikes target rate to 2.25%

Mortgage rates remain low

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The Federal Reserve's Open Market Committee today continued its course of raising its target for the federal funds rate by .25 percent, bringing it to 2.25 percent. The move is the fifth hike in six months, beginning with a 25 basis point hike at the end of June, which was the first time the Fed had raised the rate in four years. The Fed appears poised for more rate hikes until it reaches what it considers a neutral monetary policy. Mortgage rates have not followed suit yet, although most economists are predicting they will rise slowly throughout 2005. Last week, the 30-year fixed-rate mortgage averaged 5.71 percent, down from 5.81 percent the previous week, according to Freddie Mac's weekly mortgage survey. The Fed changed very little in its policy statement from its last meeting, saying it believes that even after today's hike, its monetary policy remains accommodative. Combined with "robust underlying growth in productivity," the monetary policy is providing ongoing support to ...