the staff of the Ridgewood blog
Washington DC, the Federal Reserve announced Wednesday it would hike interest rates this month at the fastest pace in nearly 30 years after a discouraging May surge in inflation.
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The Federal Open Market Committee (FOMC), the panel of Fed officials responsible for setting interest rates, said it would raise the bank’s baseline interest rate range to 1.5 to 1.75 percent, an increase of 0.75 percentage points.
Fed Statement:
Overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.
The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1‑1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Lisa D. Cook; Patrick Harker; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller. Voting against this action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate by 0.5 percentage point to 1-1/4 percent to 1-1/2 percent. Patrick Harker voted as an alternate member at this meeting.
Buying a house at today’s levels and paying 6+ % is gonna lead to another subprime style crisis. Keep your costs under control, ladies and gents!
And I thought I did well, when I got a 30 year mortgage for 9% back in the summer of 1978……….
in 1983 my new home was 18% fixed or 13.75 variable. I took the variable and did a refi for 9.75% for 15 years a few years later thought i hit it out of the park
Look on the bright side.. Higher interest rates might slow the market in 07450 but at least we will get solid respectful residents who can afford to live here instead of disrespectful loud mouths who fit in better south of route 4
Wonder what the interest charges will look like on all of that new municipal borrowing by the Knudsen cabal at Village Hall and what the Village has taken on at Ridgewood Water (which is 100% controlled by the Village). Hope Ridgewood Water likes their new HQ at the old Elks address all so the RPD could get even more space in Village Hall. Colossal theft from Village taxpayers!
I remember my parents buying a house back in the 70s and they paid $60,000 for a nice house, the Taxes or 3000,in the interest rate was between 12 and 15% today the same house is 700,000 in the taxes are 14,000
Parents new house in 1963 was $18,390 on 1/3 acre with $1,100 property taxes and mortgage rate was 3 percent. They paid it off in 20 years and had a mortgage burning party. Dad passed in 1990 and mom sold the house in 2000 for $437,000.
Young people today will never be able to pass these kinds of house profits to their children because house prices skyrocketed and mortgage rates will hit 7.5 percent by the end of this year. Couple that with $16,000 a year in property taxes and inflation 10 percent and it’s impossible to buy a house. Unless you’re jointly earning a million bucks a year.