Greg Grapsas, Mortgage Analysis Group

Greg Grapsas, Mortgage Analysis Group The mission of the Mortgage Analysis Group is to assist clients in identifying the optimal type of mortgage that best fits their needs.

To assist borrowers in identifying the most appropriate mortgage type and for existing borrowers, to determine if a refinance will benefit them.

04/29/2026

The FOMC met today and once again, 11 members voted to keep rates unchanged at the current target range of 3.50 to 3.75 %. One member, Trump appointee Stephen Miran, again voted to cut rates ¼ %. However, three of those eleven members (Beth Hammack, Neel Kashkari and Lorie Logan) who supported the current target range did not support inclusion of an easing bias in the statement at this time. That dissent is a rarity and indicates that these three dissenters may see the possibility that a more neutral bias has begun to form. Powell stressed that it does not mean that they will support rate hikes.

The Committee continues to seek to achieve maximum employment while reducing inflation to 2 % per year. As economic and political events often do, that goal currently remains aspirational.

During Chairman Powell’s comments and questioning period, he stressed that the economy is continuing to grow at a solid pace. However, job growth is slow and inflation is somewhat elevated. When asked why he plans to stay on as a member of the Board of Governors and the Open Market Committee after his term as Fed Chairman expires, he expressed his concerns over unprecedented interference by the Administration. Central banks should never be subject to political influence and countries where governments interfere with the banking system do not thrive compared to those where there is no interference. To that end, he will stay on as a governor to ensure that Fed independence is maintained. Nevertheless, he will keep a low profile and defer to the new Fed Chair Kevin Warsh. Again, Powell's term as Fed governor will expire in January 2028

The next Fed meeting will be held on June 16-17, 2026 and will be chaired by Kevin Warsh..

03/18/2026

The FOMC met and voted 11-1 to leave short term rates UNCHANGED at the 3.50 – 3.75 % range. One recently appointed member, Stephen Miran, again voted for ¼ point cut.

The FOMC issued a statement noting that while economic activity continues to expand, job gains have remained low though the unemployment rate has shown little change. What is of concern is that inflation remains elevated, well above the 2 % goal. Producer prices for February rose 0.7 % and 3.4 % year over year. The continued tariffs have contributed to these increases. What is of greater concern going forward is that the inflation reports to date do NOT reflect the current conflict in the Mideast that has caused oil prices to surge to $100 per barrel and higher.

Chairman Powell’s comments and press conference stressed improvement in their mandated twin objectives. He stressed his concern that the loss of 92,000 jobs was offset by a gain of 130,000 jobs in January, with changes in immigration policy contributed to the jobs loss. While the Supreme Court has ordered that the tariffs be unwound and refunds sent to the public, none of that has begun as yet. Any additional reduction will require that unwinding to reduce inflation.

Powell’s term as Fed Chairman ends on May 15 of this year. If a new Chairman has not been confirmed, Powell will continue to serve in a temporary role. He does have two plus years remaining as a Fed governor until the end of January 2028. As for any plans to resign before then, Chairman Powell stressed that he has no plans of resigning before the current investigation of his performance is completed. He emphasized that his statement will be his last comment on the matter.

As before, Fed policy will continue to focus on reducing the unemployment rate to 4.0 % and returning to its 2 percent inflation object, goals that have proved to be difficult of late.

The next Fed meeting will be held on April 28-29, 2026.

01/28/2026

The FOMC met and voted 10-2 to leave short term rates UNCHANGED at the 3.50 – 3.75 % range. It is a pause after three consecutive ¼ point cuts. Two members, Christopher Waller and Stephen Miran, voted for ¼ point cuts.

At his press conference, Jerome Powell maintained his commitment to the Fed’s dual mandate of achieving the goals of low unemployment (4 %) and low inflation (2%). He acknowledges that both are presently somewhat higher. He reports that economic activity has been robust though job gains have been low due to low immigration and lower participation rates in general due to the aging population. His opening statement was somewhat shorter than usual.

When pressed about the independence of the Federal Reserve, Powell stressed that to ensure credibility of their actions, it is imperative that the Federal Reserve maintain a well-defined firewall between itself and any political interference from within or outside of the government. History has shown that countries who do not maintain that firewall have seen their economic performance suffer. Without naming any country in particular, Powell emphasized the need for detachment. When the public at large no longer believes there is that independence, confidence craters and horrific inflation often follows.

As always, Chairman Powell displayed his non-musical cover of Jay Z’s “Dirt off your Shoulder” when asked about his critics.

The next Fed meeting will be held on March 17-18, 2026 and will include a summary of economic projections.

12/10/2025

The FOMC met and voted to cut the Fed Funds rate 1/4 % to the 3.50 – 3.75 % range. It is the third quarter point cut over the past three months. The vote was 9-3 with two members, Austan Goolsby and Jeffrey Schmid,voting for no cut. Not surprisingly, the newest member appointed to the committee, Stephen Miran, voted for a market rattling 1/2 % cut once again.

Due to the shutdown, there was not an October jobs report nor an October inflation report, so the Committee has had to work with alternative data sources for guidance. November employment and inflation data are scheduled for release next week.

Chairman Powell projects real growth in GDP to be 1.7 % this year and 2.3 % next year. He projects 4.5 % unemployment to be a maximum, with slow reductions thereafter. Inflation continues to hover in the 2.8 to 3.0 % range, but projects 2.4 % for next year. Given the minimum goals of 2.0 % inflation and 4.0 % unemployment, further improvement is still required.

Powell noted that the current higher level of inflation is due primarily to the effects of US tariffs. He stressed that, but for the presence of these tariffs, the current inflation level would be in the low 2s. This is what can best be described as an obvious observation. Powell does believe that once these excess costs are removed, inflation will decline.

One last observation that Powell made was rather interesting. As he was citing recent jobs data over a number of months that reflected a monthly average of 40,000 jobs ADDED, he remarked that perhaps those numbers were overstated by as much as 60,000 jobs each month. So, he believes it is quite possible that the economy has been LOSING as much as 20,000 jobs each month. His only later comment was that the Committee does not have any near-term rate increases on their radar.

Again, the Fed has always had limited tools at its disposal and the Fed Funds rate is by far the primary tool to address its two mandates: low inflation and low unemployment. The eternal conundrum is that use of that primary tool to achieve the goal of one mandate tends to negatively impact the other one. It is an exercise that must be employed delicately and rarely in a rash manner. Hopefully, given his Harvard pedigree, perhaps new Fed Governor Miran will soon understand that.

The next Fed meeting will be held January 28-29, 2026.

10/29/2025

The FOMC met and voted to cut the Fed Funds rate 1/4 % to the 3.75 - 4.00 % range. The vote was 10-2 with one member voting for no cut and the other voting for 1/2 % cut, which averages out to 1/4 % cut as well. Fed Chair Powell addressed the press and answered a range of questions with clear explanations.



Due to the continued shutdown, the Fed is operating with limited data and thus subject to loss of accuracy. Former Fed Chair Alan Greenspan said that situations without current information is like "driving a car using your rear view mirror". While the September employment report has not been publicly released, much of the preparation for it was complete before the shutdown. The ADP employment report on private sector jobs was released which showed a LOSS of 32,000 jobs in September.

The September Consumer Price Index was delay-released last Thursday. CPI increased 0.3 % in September and 3.0 % year over year. The core rate of inflation, excluding food and energy prices, rose 0.2 % in September and 3.0 % year over year, which are good signs. The goal is still 2.0 %.

Since the concern over the labor market is greater than the inflation rate, the Fed will most likely maintain its plan for continued rate reductions. In addition, the Fed will conclude the reduction of mortgage backed and other securities from its holdings as of December 1. Since June 2022, it has sold approximately two trillion dollars worth of securities, which is why interest rates have remained high. As existing retained securities mature, the Fed will buy Treasuries. Moreover, the Fed will at some point begin to BUY mortgage backed securities.Together, all of these actions should reduce the yield on the 10 yr Treasury bond, which will produce additional reduction in mortgage rates. All of these actions are kind of a big deal and of great import.

Nevertheless, the Fed will still continue to be concerned that while interest rate reductions will stimulate growth of employment, they are still charged with the responsibility of keep inflation low. Think of the condition of the economy as similar to that of an elite athlete. The goal is to achieve reduced inflation (body fat) with minimal negative impacts on employment (lean body mass).

This delicate balance, for both the economy and the athlete, requires competent leadership and proper communication to our leaders and the people. From my standpoint, that communication by this Fed Chairman is the best I've ever seen.





The next Fed meeting this year will be held December 9-10, 2025.

09/17/2025

The FOMC met and voted to cut the Fed Funds rate 1/4 % to the 4.00 - 4,25 % range. This is the first cut in nine months and the vote was 11-1. The only dissent was from the President's newly appointed Fed Governor who preferred a 1/2 % cut now and five more 1/4 % cuts before the end of the year.



Returning to the real world, Fed actions moving forward will now require more surgical precision due to two issues that are both emerging simultaneously and affect the economy in OPPOSITE directions. The first issue is a reduction of nearly 900,000 jobs added to the economy in the prior 12 month period than originally reported; along with a rise in current weekly jobless claims. How long this may last is unknown. Growth has slowed down as consumers are buying fewer items which results in the need for fewer workers. The second issue is an uptick in inflation to the 3% annual level. Fewer items are bought but at higher prices. There is a singular cause that has affected both employment and inflation; namely, the presence of existing and potentially higher tariffs. They are primarily paid by American companies and/or consumers who are buying less but at higher unit costs.

Since the tools available to the Federal Reserve are limited, any job reductions normally signal that a cut in rates is needed. Inflation worries signal the need for an increase in rates. The Fed needs to move judiciously in the months ahead to ensure that their actions will not significantly impact the unemployment rate or the inflation rate. This will require a careful threading of the economic policy needle. To be sure, the Fed has been fortunate over the past few years to reduce inflation significantly without hurting the job market. That luxury appears to have been seriously absent now.



Chairman Jerome Powell believes that unemployment will rise to 4.5 % by year end. Inflation has risen to nearly 3 % but the 2 % goal is still aspirational, though more challenging. It is the belief of the Committee that while the tariff effects on inflation are still extant, they are a one-time adjustment rather than an increasing challenge over time, hopefully. That is the reason that the Committee chose to cut rates to stimulate job growth which will continue and thrive once the tariffs are removed, thereby easing price issues. Until then, Chairman Powell maintains that the current tariff climate that plagues the economy has produced downside risks that will require vigilance.



The next Fed meeting this year will be held pre-Halloween on October 28-29.

07/30/2025

Once again, the song remains the same. The FOMC has voted to keep the Fed Funds rate unchanged at the 4.25-4.50 % range. What is different is that the vote was 9-2 to keep rates unchanged, with one member absent. This is the first time in thirty plus years that two Fed governors have dissented with the majority. The dissenters were in favor of 1/4 % reduction in rate.

Chairman Jerome Powell essentially repeated the usual observations that unemployment is still fairly low, inflation is stable though not at the 2 % goal yet, and the economy is growing, subject to the uncertainties of tariffs. It is expected that imports will continue to decline in the short run. As a result, 2nd Qtr Gross Domestic Product came in at 3 % real annual growth, a dramatic improvement following the 1st Qtr -0.5 % number.

The Committee believes it continues to need additional time to monitor the inflationary effects of the tariffs going forward, especially since the economic community is fully aware that somebody invariably must pay those tariffs and most often it is the consumer as it has the same impact as a tax. That outcome will contribute some degree of inflation. Consequently, Chairman Powell essentially announced that no significant rate cuts can be implemented until future data is available.

As the country waits for the reduction in the short term Federal Funds rate, all consumers should be aware of the limitations of the Fed. This short term rate has an immediate effect on the rates for credit cards, Home Equity Lines, auto loans and other instruments tied to the "Prime Rate". However, the Fed does not have any immediate effect on mortgage rates. For those to fall, that will require a drop in the yield of the 10 yr Treasury bond which is traded in the open market along with other debt notes and equities. Other factors related to the housing markets also play a role in the value of mortgage rates. In September 2024 when the Fed Funds rate was at 5.50 %, the Freddie Mac survey of the average 30 yr rate was 6.20 %. At the current Fed Funds rate of 4.50 %, Freddie Mac's average rate is 6.74 %, more than 1/2 % higher than last September.

The next Fed meeting will be Sept 16-17 this year. That is 7 weeks from now to allow for the annual Jackson Hole Economic Policy symposium in Wyoming.

06/18/2025

To no one's surprise, the Fed kept the short term Fed Funds rate unchanged at 4.50 %, the upper range of the index. He essentially repeated the usual observation that unemployment is still fairly low, inflation is stable though not at the 2 % goal yet, and the economy is growing, subject to the uncertainties of the upcoming tariffs. When asked why rates have not been lowered, he provided the obvious answer. The Committee needs to see what effects the tariffs will have since all economists and central bankers are fully aware that somebody will pay those tariffs, resulting in price increases of goods. In the final analysis, left in place, tariffs will be paid by the end user. That outcome will contribute some degree of inflation. Consequently, Chairman Powell essentially announced that no significant rate cuts can be implemented until future data is available.
When asked about his term as chairman ending in 2026, he had no comment other than he was focused totally on the remaining months he has on chairman. After his chairmanship ends, unless he chooses to resign, he will still be a member of the Board of Governors through Jan 31, 2028. Similarly, when he was asked about his relationship with the President, he restated his focus on his remaining time as chairman and delivered it in a manner similar to Jay Z flicking dirt off his shoulder. Every President in my lifetime has always wanted the Fed to keep rates low so this is not unusual.

The next Fed meeting will be July 29-30, 2025. Given that is six weeks from now, the Fed is always prepared to act as needed should impacts to current economic conditions occur.

05/07/2025

The Federal Open Market Committee left the short term Fed Funds rate unchanged at 4.50 %, the upper range of the index. The economy has continued to show positive growth at a solid pace but inflation continues to remain elevated. The first sentence of the Fed's statement acknowledges that "swings in net exports have affected the data". To be sure, the net effect of those swings ahead of tariffs were such that the preliminary1st Quarter GDP estimate turned negative, coming in at a -0.3 % annual rate.

Any quarter with negative growth, coupled with concern over inflation, is never a good thing. Coupled with rising unemployment,it often leads to "stagflation". Stagflation has not occurred for some time, as in decades. In normal times, unemployment and inflation move in opposite directions with the same degree of reliability as the sun rising in the East. But these are not normal times. Chairman Powell noted that the risks of both higher unemployment and higher inflation have increased. Moreover, the uncertainty over the impact of a sea change caused by tariffs has increased to such an extent that the Fed must wait and watch what the data reveals before making any change in monetary policy. If current tariff projections are fully implemented they will exceed those of the 1930 Smoot-Hawley Act. As such, they can produce unexpected results that must be fully assessed before implementing corrective measures.

In other words: If it ain't broke, don't try to fix it; but if you do and it gets worse, proceed with caution.

The next Fed meeting will be June 17-18, 2025. Given that is six weeks from now, the Fed is always prepared to act as needed should impacts to current economic conditions occur.

03/19/2025

Once again, the Federal Open Market Committee left the short term Fed Funds rate unchanged at 4.50 %, the upper range of the index. While no exact estimate of the number of interest rate cuts looking into the future, the Fed expects the Fed Funds rate to hover around 3.9 % by the end of the year and 3.4 % in 2026,

Chairman Powell noted that economic uncertainty has increased due to imposition of tariffs. The Fed is projecting inflation to stay in a range of 2.5 to 2.8 % for the remainder of this year and drop to 2.2 % in 2026. Nevertheless, they remain committed to a goal of 2 % and for now, no change in that target has been made. Unemployment has trended in the 4.0 to 4.2 % range, for now and is projected to increase somewhat to 4.4 % by year end..
The Fed will continue to SELL Mortgage Backed Securities into the marketplace, an action that keeps rates high, but will slow the effective rate of reduction of Treasury securities.

Fed Chairman Powell remains steadfast towards achieving that 2 % inflation rate goal with minimal impact on unemployment.
As always, he restated that the Committee will continue to closely monitor all relevant economic data and respond accordingly as needed.

The next Fed meeting will be May 6-7, 2025.

Address

Olney, MD

Telephone

+13019249108

Website

Alerts

Be the first to know and let us send you an email when Greg Grapsas, Mortgage Analysis Group posts news and promotions. Your email address will not be used for any other purpose, and you can unsubscribe at any time.

Contact The Business

Send a message to Greg Grapsas, Mortgage Analysis Group:

Shortcuts

Share

Category