The past week was the best example of an axiom we have always followed — you can’t predict the future. It looked like the Federal Reserve Board was locked into a rate cut before they met. As we said, the die was cast. Then we had several things come up. The trade war rhetoric started to ease. Oil fields were attacked in Saudi Arabia and oil prices spiked. Meanwhile, after falling for several months, interest rates spiked upward, even before the attack in Saudi Arabia.

At the least, these events would prove to make the Fed meeting last week a bit more interesting. We went from 95% of analysts predicting an interest rate cut, to 65% in just a few days. Even so, the markets were not particularly surprised by the .25% rate cut decision. In the absence of a surprise, there was little reaction in the markets–though the action did take a bit of steam out of the recent rate spike. On the other hand, the markets have been so volatile lately that it is hard to detect a lack of reaction. For the past few months, it seems the markets are reacting to just about everything.

When there is no surprise, there is more attention paid to the Fed’s statement following their meeting. In this case, the markets were hanging on every word, especially in light of recent events. The short statement was also pretty much as expected. It talked about the economic headwinds the economy faces which supported the rate cut decision. With regard to future rate cuts, this is where the Fed must be transparent, but also vague. Thus, while they may see future rate decreases, they did not say if they will happen this year and they also indicated that the future direction of the economy and trade wars will guide them as the year progresses. The next Fed meeting is in late October and the minutes of this meeting will be released before that meeting. Perhaps we will know more by then.

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