4 Reasons Why it is a Good Time to Buy a Home in Colorado
1. The Fed Fund Rate Did Not Change
Last week, the Fed did not make any change to Fed Fund Rate (the rate at which depository institutions (banks) lend reserve balances to other banks on an overnight basis). The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term.
2. The Fed Fund Rate is Expected to Increase in December
Investors are concerned with potential uncontrolled inflation and if the Fed is/will raise rates too aggressively. Any miss in the forecast, with higher inflation implications, could maintain an improving market, which means increasing rates. The Fed plan is gradual rate increases as long as employment and wage growth are strong. Futures market investors are pricing a 75% probability of a Fed increase in December. The Fed also projects three more increases in 2019 and two in 2020.
3. The Economy is Strong
Stocks were up at the beginning of the week based on the trade talk report and a rebound in the technology sector. On Monday, the Dow fell more than 600 points, primarily within the technology sector and because of the rising U.S. dollar. The U.S. dollar has reached a 16-month high because of concerns with the European economy if a Brexit agreement is not reached this week. An increasing dollar is a sign of a strong economy but the flip side to the global economy is it reduces sales and profits for American companies that do business overseas.
4. Interest Rates are Still Lower Than they Used to Be
While it might be true that rates have hit their 7 year highs, they are still more than a full point lower than they were 10 years ago. And all projections are calling for rates to increase through 2020.
By Caroline Germano - Nov 14, 2018