FOMC Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s commentary following the Federal Reserve’s FOMC statement released this afternoon on monetary policy and the economy:

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"Although May’s inflation data came in better than expected, perhaps surprisingly, the FOMC is now projecting only one rate cut in 2024. However, it is notable that the dot plot indicates it is a close call between one and two cuts. The tight job market – highlighted again in May’s employment data – is likely leading many members to continue to be cautious about cutting rates before inflation is consistently lower.

“Beyond the projections for 2024, the FOMC also moved up its projection for the terminal rate, as we expected. Once it starts, this cutting cycle is likely to be shorter than past cycles.

“Today’s announcement does not change our forecast for mortgage rates. We still look for mortgage rates to drop to about 6.5% by the end of 2024."