June 15, 2017

The Federal Reserve Increases Interest Rates, but Slow Inflation Keeps Mortgage Rates Low

Pacific Union Chief Economist Selma Hepp breaks down the implications of the Federal Reserve's decision to increase interest rates earlier this week.

 

  • The Federal Open Market Committee’s (FOMC) two-day meeting concluded on June 14, with another 25 basis-point increase, from 1.00 percent to 1.25 percent. This was the third increase in six months, with the anticipation that future hikes will come at a slower pace.
  • While the Fed’s decision was anticipated and already accounted for by the market, what lies ahead is less than certain. The Fed is expected to increase rates again this year, but concerns over slow inflation may affect future decisions.
  • Fed Chair Janet Yellen mentioned lower cell-phone and prescription-drug costs as the main drivers of falling inflation, the forecast for which has been downgraded for the remainder of the year. Nevertheless, the declining U.S. unemployment rate suggests that employment is reaching maximum levels, and consequently, employers need to raise wages to attract and retain workers. The increase in wages should drive up inflation gradually.

 

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About The Mark Company

The Mark Company is one of the nation’s premier urban residential marketing and sales firms. Founded by Alan Mark in 1997, The Mark Company provides a full range of core consulting services including analytics, design, marketing and sales for urban high-rises and suburban attached properties throughout the Western United States. The firm is a trusted partner to global leaders in residential development and finance, providing buyer-driven sales and marketing strategies that produce industry-leading results. The Mark Company has represented more than 10,000 residences and generated over $5 billion in sales for some of the nation’s most notable and successful developments including The Infinity in San Francisco, Evo in Los Angeles and The Martin in Las Vegas. Current projects include 181 Fremont Residences and The Austin in San Francisco and Cavalleri in Malibu. The Mark Company is a subsidiary of San Francisco-based Pacific Union International, the eighth-largest residential real estate brokerage in the U.S. based on 2016 sales volume of $10.15 billion. Pacific Union merged with Los Angeles-based brokerage John Aaroe Group in December 2016. This strategic business collaboration links three of the strongest residential real estate firms on the West Coast, supporting combined 2016 production of $10.1 billion by 1,161 real estate professionals in 38 offices throughout California. For more information, please visit www.themarkcompany.com.