The Federal Reserve Board meets today, and the big question is – did the first two months of this year’s data enable the Fed to grant itself an extension regarding raising short-term interest rates? To answer this question, let’s review the two most important pieces of data. First, the economy created approximately 800,000 jobs in the first two months of the year, and the unemployment rate stands at 3.6% — extremely low by any standard. Based upon this point of data—the answer would be yes.

The second point of data encompasses several measures of inflation, including the Consumer and Producer Price Indices, wage inflation and the PCE Inflation Index (Personal Consumption Expenditures Price Index). Just about all of these measures were stronger in January after easing for several months. February data is not completely reported yet, but for example, the CPI was up 0.4% last month, a bit high for the Fed – but the PPI came in lower than expected. Based upon the second set of data, we would say that there should be almost no doubt that the Fed would be likely to raise short-term rates tomorrow—either .25% or .50%. This would have left only one open question — are they going to continue to raise rates in the coming months?

Before these points of data were released, the answer would have been 50/50. Based upon the data, it would have appeared that the Fed would be leaning towards one more increase and quite possibly a few more. Only, it is not only the data influencing the Fed. With major bank failures in the headlines, there are questions about the effects of higher rates on the banking sector. Some are now saying that the Fed could hold off tomorrow and for the near future. While others indicate the Fed will raise rates, but be more cautious in their statement. By tomorrow afternoon we will know more about the Fed’s thoughts. Meanwhile, in response to concerns about the banking sector, long-term interest rates, such as mortgages, have fallen precipitously in the past week or so — good news for homebuyers.

Dave Hershman is the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School. Want to send this commentary and other news in a personalized format to your sphere database or on social media?  Sign up for a free trial at