Fed funds rate
Where are Interest Rates Going? Nowhere for Now
The Fed released its statement on the economy today and also revised projections for future GDP growth. Bernanke also had a press conference on the economy. What did we lean? Not much! What the Fed did say was the economy hit a soft patch but because of “damping effect of higher food and energy prices on consumer purchasing power and spending” as well as “supply chain disruptions associated with the tragic events in Japan”. For these reasons mortgage rates today and bank CD rates will remain low.
The Fed feels both events are temporary so the economy will pick up again later this year. When that happens CD rates, mortgage rates and other interest rates will move higher. The Fed also said the they today to keep the target range for the federal funds rate at 0 to 1/4 percent. They didn’t say they would keep the range at 0 to 1/4 percent for the foreseeable future which is a change in language.
The also lowered GDP growth for the rest of 2011 and 2012. All this will keep CD rates and savings account rates low for now. Don’t expect interest rates to move higher until the economy picks up and inflation picks up.