I think it’s both good and bad news.  It’s good for some people, (unless you have a lot of cash in a CD) that the Fed is not increasing rates, because it influences mortgage rates, which are staying near historic lows.  It’s bad if you have a lot of cash and don’t know what to do with it (if that’s the case, call me, I’ll tell you what I’m doing with cash) or if you are looking for a sign that the recession is over (again).  Read on for a summary of the meeting…..

Putting the FOMC statement in plain EnglishToday, in its 7th meeting of the year, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged. 

The Fed Funds Rate remains at a historical low, within a Fed’s target range of 0.000-0.250 percent.

In its press release, the FOMC said that the pace of economic recovery “has slowed” in recent months. Household spending is increasing but remains restrained by high levels of unemployment, falling home values, and restrictive credit.

For the second straight month, the Federal Reserve showed less economic optimism as compared to the prior year’s worth of FOMC statements dating back to June 2009. However, the Fed still expects growth to be “modest in the near-term”.

This outlook is consistent with recent research showing that the recession is over, and that growth has resumed — albeit at a slower pace than what was originally expected.

The Fed also highlighted strengths in the economy:

  1. Growth is ongoing on a national level
  2. Inflation levels remain exceedingly low
  3. Business spending is rising

As expected, the Fed re-affirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period”.

There were no surprises in the Fed’s statement so, as a result, the mortgage market’s reaction to the release has been neutral. Mortgage rates in Massachusetts are thus far unchanged this afternoon.

The FOMC’s next meeting is a 2-day affair scheduled for November 2-3, 2010.