Takeaways from the Federal Reserve's latest meeting on rising inflation

This morning we are learning more about the Federal Reserve meeting earlier this month. They have been talking about how to fight inflation with rate hikes and joining us now with a little bit more information on this is local financial advisor Bruce Allen. Good morning, Bruce. Good morning, Jordan. So, Cap, catch us up to date. What exactly were the big takeaways from this latest meeting? So, what happened yesterday was the Federal Reserve released their minutes, excuse me, on Tuesday and they talk about what's happening in the meeting that occurred on February 1st when they raised rates by a quarter of a percent. It turns out that the Federal Reserve thinks that they're going to raise rates by another quarter of a percent, the pace of rate rises, which was as much as three quarters of a percent or half a percent.

It's likely that it's going to stay at about a quarter of a percent. So, we're looking at possibly seeing rates go up to five percent in May and possibly around five and a quarter later on in the year. But the Federal Reserve is very concerned, obviously, about continuing to fight inflation, but the pace of the rate rises is going to slow down. That's number one. Number two is the Federal Reserve surprisingly also expressed a lot of concern about the fact that the Congress has not resolved the debt plan issue. And so, they're very worried that there could be economic damage fallout if the Congress and the Senate don't generate some kind of a plan to take care of the budget deficit. Yeah, so, you're talking about these rate rises potentially slowing down here in the future.

This comes after last week. We saw pretty significant rate rises happening there. What's driving those rises? Short-term rates have been rising. They rose last week. We were talking about that last week, and they continue to rise where the short-term Treasury market was seeing rates rise where actually the one-year Treasury hit five percent for the first time. And rates are rising partly because the inflation data has been significantly higher than people would like to see, especially the Federal Reserve. And so, there's a thought that potentially the Fed could raise rates higher than five percent or five and a quarter.

There's worries in the market that rates are going to keep going up. Okay, so make this real for us. Take us beyond the numbers here. When we say these rates are going to be rising, what is the real-world impact we're going to see on our economy? The first impact that we're seeing right now is in the real estate market. Redfin came out with a study yesterday that said that the real estate prices in the United States in the second half of 2022, that housing prices actually fell almost five percent, four point nine percent. That's a fairly significant event in that that has not happened since 2008. And the pace of that, excuse me, that significant decline in housing prices is the first indication that the interest rate hikes that the Federal Reserve has done are taking effect and they're impacting the real estate market.

Now, in terms of Denver, year over year, what's the good news about Denver is that real estate prices actually on the homes here in Denver actually went up 2.91 percent according to Redfin. So we have been spared that so far, but we'll see. Okay, well, so a lot of people would like to see those rates to slow down the rising. What you did say is kind of coming up and we're expecting that in the future. So I have to keep a very close eye on all of that. Bruce, thank you very much.

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