The Federal Reserve has, as anticipated, increased the Federal Funds rate by 0.25%. The rate moved from 3.25% to 3.50%.

The statement that was issued with the announcement left in the terms "accommodative" and "measured".  This means that the Fed intends to keep increasing short-term rates by small increments.

Despite the increases, housing remains robust. Interest rates have been simulative for the housing market because they are still very low. Many are wondering if we are nearing the top of the market, but at this point it's yet to be seen. The housing market is more dependent on long-term rates than short-term, so the real question on everyone's mind is whether long term rates will now begin to rise as well.

Publish Date: 08/09/2005