The door is open to an increase in short-term interest rates this year, but just barely. According to the minutes of the Federal Reserve's mid-July policy meeting, officials would like to keep their options open.
According to the meeting minutes which were released on Wednesday with their typical three-week lag, Fed decision makers appear to be divided on the proper timing of a hike in the benchmark interest rate. Several of the officials believe that the state of the economy remains too fragile for a second increase – the first being last December. While others suggested the timing would be ripe as early as September. However, the Fed Funds future is predicting only an 18 percent probability of a rate hike next month but 50 percent by December.
Meanwhile, these same economic factors appear to be driving mortgage rates near all-time lows with conforming no-point 30-year fixed rates averaging 3.375 percent while the 15-year rate is near 2.625 percent.
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