Economic numbers have been encouraging throughout March, as the unemployment rate has held and job gains have continued to trend upward. Data also shows that average household spending is on the rise and inflation is ticking up toward two percent.

This information comes in after the February meeting of the Federal Open Market Committee. The mission of the Committee is to improve employment numbers and economic stability, and part of that effort is a set goal of two percent inflation over the long term. The FOMC consistently monitors global market developments and other financial indicators to ensure an accurate inflation analysis.

The group’s consensus is that moderate economic growth can be expected to continue, and that the labor market should become more stable as policies are adjusted and inflation closes in on the targeted percentage. Inflation numbers based on market measures remain relatively low, and the goal of two percent stands as a medium- and long-term mark.

Another indicator of potential growth is that business investment appears to be steadying somewhat. This factors into any decision the Committee makes regarding rate changes, as investments provide useful information regarding both current and future labor market statistics.

While growth and economic activity appear to be sustaining, potential and immediate risks are fairly balanced and are not currently raising any red flags. Indicators that could point toward a change in inflation or market stability are continually monitored to inform future rates.

In light of these most recent numbers and the positive forecast, the federal funds rate was increased from a target range of three quarters to a full percent. This range will allow for continued market growth without slowing the progress on inflation.

With maximum employment being the main objective, the Committee assesses both speculative and realized economic development to inform federal rate adjustments. A second increase to the funds rate would come only after thorough collection and review of information relating to market conditions, signs of altering inflation expectation, and any number of international financial pressures.

As inflation nears its target, action may be taken to ensure the market continues expansion at a gradual pace. While the Committee seems confident that the economy will stay on track to warrant additional increases to the federal funds rate, any newfound data will be used to inform and influence that analysis.

At present, the rate is below the number that most experts suspect it will reach. It is highly likely that the rate won’t hit any predicted numbers for quite some time as new policies are realized and studied.

As the FOMC tries to maintain accommodative conditions, the Committee’s policy is to use payments received from agency debt and mortgage-backed securities and to reinvest that capital in more agency-held securities. This will remain the practice while the new rate level becomes normalized.

With steadily improving economic numbers and an outlook that predicts more of the same, Los Angeles real estate should only continue gaining value. The gradual economic expansion should create favorable conditions for both buyers and sellers in the housing market.

If you’re interested in buying or selling a Luxury Home in Los Angeles, please contact us now at 323-829-8811 or email Susan Andrews at susan@luxurylahomes.com.

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