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 kept its target rate unchanged, but the economic projections released today have shifted markedly relative to the projections in March, with the median member’s projection showing much higher inflation in 2026 and somewhat higher inflation in 2027.  Not surprisingly, with elevated concerns about inflation and little sign of deterioration in the job market, the median member now projects an unchanged fed funds rate this year, but still expects some cuts over the next two years.

"The vote to keep the rate target and balance sheet policy unchanged was unanimous. It will be very informative over the next few weeks to see whether there is still as wide a divergence of views across the FOMC regarding the appropriate stance of policy at this point. 

“The overall tone is more hawkish than many had anticipated, and the immediate market reaction was an increase in rates. MBA’s forecast is for mortgage rates to average about 6.5% over the forecast horizon, given the resilience in the broader economy and job market, the likely stance of monetary policy given persistent inflation, and ongoing fiscal pressures, which will keep upward pressure on longer-term debt."