Weekly Economic Review: Fed Lowers Forecast of Future Rate Hikes

Posted by Laine Smith on 3/23/15 1:00 PM

Topics: Economy

According to a statement from the Federal Reserve’s meeting last week, Fed officials want to see further improvement in the labor market and increased inflation before they begin to raise rates. Officials also raised requirements which would justify the first rate hike.


The Fed lowered expectations for economic growth and inflation over the next three years signaling a longer length of time before they will begin to raise rates. The statement was well received by mortgage investors as it suggests rate hikes are further away and will take place at a more gradual pace.

Last week in the economy:

  • The S&P 500 was up 2.66%, ending the week at 2,108.
  • Mortgage rates (the national average) dropped 0.10% (10 basis points) last week. 
  • The Federal Reserve met Wednesday, releasing a statement well received by mortgage investors, pushing expectations for federal fund rate hikes further into the future.
  • Housing starts fell to a seasonally adjusted annual rate of 897,900 in February, according to data released Wednesday. January’s estimate of February housing starts was 1.081 million. Slower economic growth reduces expectations for future inflation – a good indicator for mortgage rates.

What's on the economic calendar for the week of March 23, 2015:

  • Tuesday: New Home Sales and the Consumer Price Index, the most watched inflation report, will be released.
  • Thursday: Jobless claims will be released.
  • Friday: The GDP will be released.

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