How the Federal Reserve Affects Mortgage Rates
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The Federal Reserve influences mortgage rates, but doesn't set them. At its Sept. 18, 2024, meeting, the central bank reduced the federal funds rate by half a percentage point to a range of 4.75% to 5%, a significant cut after holding rates steady for the past 14 months. In a news release, the committee noted that job growth has slowed since August, and inflation has made further progress but remains higher than its objective of 2%.
Mortgage rates are influenced by many elements, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking. The Federal Reserve's monetary policy is a factor, too, and is set by the Federal Open Market Committee.
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