Houston's Rate Sheet

Fed raises rates with little reaction

As expected, the Fed raised rates 25 basis points to 4.5 percent. This will raise the interest rate for Home Equity lines of credit to 7.5 percent. After the announcement, the Fed indicated that it may continue raising rates based on future economic data. According to the Fed, Core inflation remains "relatively low", but economic growth and high oil prices are a threat to price stability (inflation).

The bond markets showed little reaction to the announcement. Mortgage backed securities (MBS) prices closed little changed over the past couple of days, closing down -1/32. Tomorrow, the ISM manufacturing index and Construction Spending will be released.

Congratulations to Mr. Greenspan on a wonderful career. Today was his last day as Fed Chairman.

posted by Vincent Biondillo @ 3:56 PM