The Federal Reserve Board’s Federal Open Market Committee today decided to keep its target for the federal funds rate at 5.25 percent.
The committee said in an announcement released shortly after its meeting that a moderation in economic growth is continuing, partly due to a cooling housing market.
“Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures,” the Fed said in a statement. “However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.”
However, the Fed said that some inflation risks remain in place and future movements in policy will depend on the outlook for inflation and economic growth.
The federal funds rate is a key short-term overnight rate, which often impacts movement in long-term rates on home mortgages. The average rate on a 30-year mortgage was 6.36 percent in the Mortgage Bankers Association’s latest report released today. The average rate on a 15-year mortgage was 6.04 percent, while the average rate for a one-year adjustable-rate mortgage was 5.95 percent.