As financial markets had anticipated, the Federal Reserve approved its second rate hike of 2017 on Wednesday.
In a statement published at 2 pm Eastern time, the Federal Open Market Committee said since meeting in May, data indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year.
In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.
Lending Tree CEO Doug Lebda said for most mortgage borrowers, a quarter-point move in interest rates will have a very negligible impact.
“Fixed-rate mortgages are tied to the 10 year Treasury yield, and many lenders have been anticipating the rate hike for several months, baking the rise in interest rates into their loan pricing,” Lebda said. “For those consumers who have adjustable-rate mortgages, it’s probably a good idea to consider refinancing and locking in a low rate before the Fed raises rates again.”
Consumers with variable rate credit cards will likely see a slight uptick in the next 30-60 days, about $5 for every $2,000 of debt, Lebda added.
“And consumers with home equity lines of credit, or HELOCs, will most likely see a small uptick in their next billing cycle,” he said.
According to the Fed, job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined.
Household spending has picked up in recent months, and business fixed investment has continued to expand.
“On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent,” according to the Fed’s post-meeting statement. “Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.