Updated on January 28, 2015 3:34:06 PM EST WEDNESDAY AFTERNOON UPDATE: The FOMC meeting of the year has adjourned with no change in key short-term interest rates. There were a couple of changes in the common verbiage used in recent statements regarding inflation projections and the timing of the Fed’s first rate hike. The biggest changes indicated the Fed believes the recent drop in gas prices will keep inflation below their target rate for a longer period than previously thought. Inflation hitting the Fed’s preferred rate was needed before they started raising key rates. That change in verbiage now has some analysts thinking the first rate hike may come later in the year than previous estimate of spring.
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The effect on the markets has been mixed. Stocks set lows of the day after the announcement and are still near those levels with the Dow down 29 points and the Nasdaq unchanged from yesterday’s close. The bond market is rallying, now up 35/32 (1.71%), which should improve this afternoon’s mortgage rates by approximately .250 of a discount point from this morning’s pricing.