On a day when new single-family home sales plummeted a record 32.7% in May, Federal Reserve officials are expected Wednesday afternoon, June 23, to announce no change in the nation’s benchmark interest rate.
The Federal Open Market Committee is scheduled to issue a statement accompanying its decision on the benchmark federal funds rates at 2:15 p.m EDT. The FOMC on April 28 maintained the target range for the fed funds rate at 0% to 0.25%. The Fed has kept interest rates at historic lows near zero since December 2008.
To be sure, the new home sales data for May issued by the Commerce Department bolsters the Fed’s argument for keeping rates low in order to encourage activity in the mortgage market.
With the fading of the popular $8,000 first-time homebuyer’s federal tax credit, sales of new single-family homes hit their lowest level since record keeping started in 1963, to a 300,000-unit annual rate in May from a downwardly revised 446,000 units in April.
Economists’ consensus is for no chance of a change in the Fed’s policy of keeping rates low for an “extended period” as the nation’s economic recovery crawls along at a snail’s pace.
When the FOMC meets, members will be confronted with the risk of a weaker economy coming up against the limits of monetary policy when interest rates are already zero, according to Steve Blitz, senior economist with New York-based Majestic Research.