What Will The Fed Do?

The Federal Reserve Board will meet again tomorrow morning. Ben Bernanke and his staff of professionals will weigh all options on both the current economic conditions and future "forecast" market conditions and whether or not to leave rates unchanged or perhaps a .25-.50% cut. Currently the market has a cut of .25% "baked in" to the current market; however there are many "seasoned" professionals that are suggesting no rate cut is needed. In fact a couple of Mr. Bernanke's colleague's were veryblunt that no further rate cuts were either needed or warranted given the current state of inflation, mostly linked to the escalation of commodity prices such as fuel and food costs; both of which have increased dramatically in recent months.

Most recently the Fed had hinted that it would take a more conservative approach to monetary policy however stated that it will do what it must to make sure financial markets function on a normal level going forward. Keep in mind should the Fed decide to cut rates these cuts do not directly impact mortgage rates! More over it's the role in these particular cuts on the overall macro economic economy that will determine the future of mortgage rates and more specifically the "flight to quality" for MBS (Mortgage Backed Security) traders that WILL determine the future of mortgage rates.

We have yet to see a significant refinancing boom in quite some time especially given the current economic climate. I believe this is due to the tightening of lending guidelines and the huge volatility in mortgage rates right now.

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