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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“The FOMC did not change its target for the federal funds rate but did shift its statement to acknowledge that inflation is slowing, unemployment is rising, and that there are now more balanced risks to the economy. While the Fed still hopes for a slower rate of inflation, there is a greater risk now that keeping monetary policy overly tight for too long could lead to unnecessarily higher unemployment.

 "The FOMC vote to keep rates steady for now was unanimous, but there have been increasing calls from many Federal Reserve officials to begin cutting rates. We are holding to our call for two rate cuts this year, with the first in September, as we expect that inflation will continue to moderate.

 "Mortgage rates are now well below 7%, and there has been some modest pickup in refinancing activity in recent weeks. We expect that mortgage rates will continue to drift lower through the remainder of the year, particularly if the Fed does launch a series of rate cuts in September.”