What The Fed Said

Here are some highlights of the Fed’s comments on Wednesday:

• Economy has been expanding at a solid pace.  
• Labor market conditions have improved further, with strong job gains and a lower unemployment rate  
• Household spending is rising moderately boosted by recent declines in energy prices 
• Committee reaffirmed its view that the current range for the federal funds rate remains appropriate 
• Fed will continue to reinvest payments from its holdings of longer-term securities to keep its portfolio at sizable levels

So the result is that a lower federal funds rate (the rate at which banks lend to each other) will keep rates on short term loans like 1 to 5 year ARMs low.  And the Fed’s reinvestment in longer term securities should help keep rates on longer term loans in check.  All good news for the still recovering housing sector.