Wednesday, April 11, 2007

Royal Bank Report - Fed shifts to neutral policy stance, almost

Royal Bank report - The Federal Govenment shifts to neutral policy stance - or almost

The Fed shifted to a neutral policy stance in mid-March but is keeping the focus on the upside risks to the inflation outlook.

  • Economic numbers have been mixed and, on balance, point to another sub-par quarter for U.S. economic growth.

  • Markets are focussing on the risks associated with the repricing of the housing and mortgage markets and are priced for a lower Fed funds rate.

  • The core inflation rate remains elevated, giving little room for a near-term policy rate reduction.
    However, once the core inflation rate heads lower, the Fed will be in a position to tweak the policy rate down.

  • Interest rates will be range-bound during the near-term, but stronger second-half growth will see some of the froth come off the bond market.

    Source: "Financial Markets Monthly", Economics Departnment, RBC Financial Group.

    Read more about mortage interest rates
    Toronto Real Estate Board (TREB) Average Prices and Graph

    For more information please contact A. Mark Argentino

    A. Mark Argentino, Broker, P.Eng.,
    Specializing in Residential & Investment Real Estate
    RE/MAX Realty Specialists Inc., Brokerage
    2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

    BUS. 905-828-3434
    FAX. 905-828-2829

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