This announcement came with little surprise due to two main factors. First, low interest rates are good for an ailing economy. In theory, it helps the economy because money is very "cheap" to borrow. This should have a multiplying effect on the rest of the economy as business borrow more, spend more, sell more, etc. It also helps because it affects consumer spending with things like the rates on car loans and home loans.
The second reason why the FOMC announcement was not surprising is because the Fed is always concerned with the nasty specter of Inflation. Recall that the basic definition of inflation is "too much money chasing too few goods" which is a recipe for prices rising. Well, with the current state of the economy, that's a very small threat. In fact, consumer prices have been dropping and inflation seems like it will be kept at bay for a good time to come.
So, what does this all mean to you as a consumer? It means that right now is a great time to buy a home. 30-year fixed mortgage rates have been hovering around the 5% level for quite some time. That is an extremely low rate for such a large loan and long period. Don't forget that there are two elements to buying a home; there is the price and the interest rate. Too many people focus on price and not enough focus on the interest rate. Even a small move in interest rates (as low at half a percentage point) can mean a large difference in your monthly payments and the overall payments during the life of a loan. A home that you may be able to afford this year will not be affordable to you next year simply because the interest rate changed.
It's difficult to say when interest rates will change. The only thing that is certain is that they will change and it will have a material effect on the economy and, possibly, your checkbook.
