“Policymakers are likely to back away from a forecast of three rate reductions this year, but it’s unclear whether they will pencil in one or two cuts,” she said.
The central bank’s future approach is likely to be impacted by a multitude of different considerations, she said.
“It’s the full economic picture, not a singular factor, that will guide their decision,” she said. “The FOMC will hold off on making any changes to the federal funds rate until inflation, and the factors that drive inflation, such as a more balanced labor market, make significant and sustained progress toward the Fed’s target, or there’s a significant decline in economic activity or worrisome weakness in the labor market.”
All this means the Fed’s announcement today is unlikely to have a big impact on mortgage rates – barring a surprise, according to Kushi.
“If the press conference and projections indicate a more hawkish tone than markets anticipate in the June meeting, mortgage rates may move up further, or vice versa,” she said. “Lower mortgage rates would be welcome news for potential home buyers facing one of the least affordable markets in over three decades.
