FOMC Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni's commentary following the Federal Reserve's FOMC statement released this afternoon on monetary policy and the economy:

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"The FOMC cut the federal funds rate target by 25 basis points, in line with market expectations. The projections show that the median FOMC member anticipates two additional cuts in 2025 and one more in 2026, with the expectation that the job market will remain soft while inflation, while rising, won't move too far before returning to the Fed's 2% target. While the decision was not unanimous, with one dissent from the newest governor, Stephen Miran, the strong vote for the 25-basis-point cut suggests that members, while acknowledging that downside risks to the job market have increased, are not panicking about the state of the economy.

"Mortgage rates, along with longer-term Treasuries moving in advance of this dovish shift in monetary policy, reached their lowest point for the year last week, spurring a strong jump in refinance activity. If mortgage rates hold at these levels, origination activity will be boosted, both for homeowners who purchased in the last three years and can realize considerable savings at these rates, and for potential homebuyers, who now have one more reason to look for a home, in addition to increasing housing supply in many markets."