Saturday, March 4, 2017

With roaring stock market, Fed suggests rate hikes soon

The Dow Jones industrial average broke another record this week, surpassing 21,000 for the first time.

So far, it seems there is no limit to the "Trump effect" on the stock market reaching new heights. Since the November election, the stock market has gained about 10 percent, with the Dow Jones shattering the historic 20,000 point record last month. Then it broke past the 21,000 mark this week following President Trump's speech promising tax repeals, deregulation and more infrastructure spending.

The stock market highs come at a time when the U.S. unemployment rate is low, at 4.8 percent, and wages finally climbed in 2016, pushing inflation rates to rise. These are some of the key economic indicators Federal Reserve officials will weigh to consider adjusting the central bank's interest rate at their mid-March meeting. Based on current data, it is likely Fed officials wil raise the 0.5 percent rate to 0.75 percent, which also influences other interest rates including mortgage rates.

How long will stock market boom continue?

There are still few details known about Trump's economic proposals, and unclear how many policies will garner Congressional support to become law. Thus far the markets are moving based on Trump's pro-business rhetoric coupled with stronger economic activity. The Fed has suggested there may be multiple rate hikes in 2017, but that will depend on continued economic strength.

Currently interest rates remain at relatively low levels by historic standards. If you are looking to purchase a new home or refinance your mortgage, call a Loan Advisor at 877-939-0339.

No comments:

Post a Comment