The mortgage markets officially enter "Wait-and-See" mode beginning today as the Federal Open Market Committee begins their two-day meeting. The importance of the FOMC's meeting to mortgage markets is all in the words of the committee as opposed to their actions (or lack thereof).
After all, the group has not "done anything" in a year and yet markets always consider its meetings to be a highly-anticipated event.
What will the FOMC say about inflation, the economy, and the outlook for the future? This is what impacts the mortgage markets more than anything else.
If the Fed is fearful of inflation, mortgage rates will go up because the dollar is expected to lose value. That dimishes the value of mortgage bonds to foreign investors.
If the Fed is satisfied that the economy is exhibiting controlled growth, mortgage rates will come down, by contrast.
Right now, markets are anticipating a bullish view on inflation from the Fed and that is one of the reasons why mortgage rates increased so dramatically since March.
It will be looking for further clues at 2:15 P.M. ET Thursday afternoon.
