Fed Rate Hike Does Not Ding Senior Housing REITs
- Author: Zachary Reyes Jun 24, 2017,
Jun 24, 2017, 7:57
The Federal Reserve raised interest rates on Wednesday for the second time in three months, citing continued USA economic growth and job market strength, and announced it would begin cutting its holdings of bonds and other securities this year.
The Fed said a recent softening in inflation was seen as transitory, but the latest tepid price readings made investors question its view that the USA economy is continuing to improve.
The Fed also mapped out a very gradual approach to shrink its $4.2-trillion holdings of Treasury- and mortgage-backed assets that would allow it to begin as early as September. The plan calls for gradually reducing these holdings in ways that do not disrupt markets.
The shekel continues strengthening against the dollar and against the euro today despite last night's decision by the US Federal Reserve to raise interest rates.
The average 30-year fixed mortgage had a rate of 4.02% on Weds., June 14 - the lowest since November 16, 2016 - and an average of 0.24 discount and origination points.
The US Federal Reserve lowered its forecast for inflation but raised its prediction for growth, opening the door for further rates hikes in 2017. As far as interest rates are concerned, the median forecast was for one further rate increase by the end of 2017.
The Fed has not reached its 2% core inflation target over the past four years, with monthly consumer inflation released on Wednesday again weaker than expected.
"The third rate hike in seven months, coming not long after a relatively poor Q1 GDP print, suggests the Fed has become less data-dependent in its monetary policy decisions", Fitch Ratings Chief Economist Brian Coulton said. From there, the "cap" will increase by $6 billion every three months over the course of a year until it hits $30 billion a month. 1 to 1.25) in which the effective funds rate floats on a day-to-day basis. Meanwhile, the S&P 500 Index fell 0.1 percent, while the Nasdaq Composite fell 0.4 percent, led by tech stocks.
The administration's budget does expect the federal government's interest rate costs to rise, but that is due to the faster economic growth the program is expected to foster, Mulvaney said.