AvaTrade Release FOMC & Housing Market Special Report

AvaTrade Release FOMC & Housing Market Special Report

Award-winning trading platform, AvaTrade yesterday published a special report that discusses the Federal Open Market Committee meeting and the implications this can have on the US Housing Market.

This week in the US was an especially interesting one financially and so for investors with some very important economic readings coming from the country. None less, than those were released as a result of an FOMC meeting – the results of which were released on Wednesday evening. At this point, the Federal Reserve would announce its interest rate decision. The importance of this was prudent to those looking to invest in real estate.

This is because those who are interested in such an investment would be loathed to carry on with these plans if there were rate hikes. While if the contrary occurred and interest was lowered, then this section of the market would see investment growth. All very basic stuff in the world of investment. However, due to the size of the real estate market, this has a significant ripple effect in other areas of investment. As such, whether or not you are an investor in the US Housing Market, there could be repercussions for you too.

Last year, despite various elements that may have hindered the economic factors, it transpired that the interest rate was cut by 3x. As a knock-on of this, consumer confidence saw a boost. This culminated in reading that occurred the day before the interest announcement that predicted a number of 128 against the previous reading of 126.5 Due to this, hopes for a rate cut were lowered and a non-reaction was predicted.

The Result

As it transpired, they were correct as the Fed left the rates unchanged from the previous year. This who that there is no expectation on behalf of investors that the Fed will lower interest rates year after year and that there is no autopilot policy in place. This is at odds though with the US President, who had previously seemed unimpressed by the situation.

However, according to AvaTrade, “Under the current situation, we do not need another three interest rate cuts, even one is more than enough to continue to support the housing market and this may happen only if the economy deteriorates”. As such, the lack of a cut symbolises the fact that the economy is actually in a steady situation currently and that this is no reason for investors to be concerned.

The move to not change anything though by the Fed and so only really illustrated there was no real clarity in regards to the situation. This has thus made it very hard to predict what might happen in the future. It is AvaTrades’ belief that they are merely waiting for the economic forecast scheduled for May in order to evaluate the issue and plan their next move. It is not possible to know for sure what will happen until this time next year.

Essentially, the takeaway is that everything is as it was – but this might not stay the same for long. With AvaTrade stating, “Given the geopolitical pressure, concerns of further trader wars, and the looming election,  I personally think that there is a higher chance that the Fed will cut the interest rate rather than increase it this year, and this should support the housing market provided everything else stays on track”.

It is an unpredictable time it seems but with some big US companies seeing good progress of late, it will be interesting to see the outcome of that report in May and then the Feds reaction to it.

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