One year ago it appeared the Fed was prepared to start raising interest rates as the economy looked like it was starting to walk instead of crawl. Investors were looking at a July rate bump then later in September and October and surely by December of 2015 the Federal Funds rate – the rate banks charge one another for short-term, overnight lending- would be closer to 1.25%. Today it’s at 0.50% with a new round of two-day meeting of the FOMC starting today. Will the Fed move? Does it matter?

Okay, let’s consider a few observations. The Fed Funds rate has effectively been held at zero for what, years? Prior to a 0.25% hike last December the last time the Fed Funds rate was increased was a decade ago. But consider the rate bump last December, what happened? It’s hard to make a direct correlation between borrowing costs of banks and stocks but at one time the Dow was above 18000 for a relatively extended period before heading below 16000 earlier this year. Today, the Dow is just above 17000 and is tracking the price of oil more than anything else. If the Fed did increase rates by another 0.25% what might happen?

The initial reaction by stocks would be a pullback as the perception is that borrowing would slow down due to the impending rise in interest rates. That’s the standard response and as such mortgage rates would soon follow suit as would most all forms of borrowing. But again, does it matter? As it relates to a mortgage for a single residential property what happens when rates go up by 0.25%? On a $200,000 30 year note the rise in payment is an earth-shattering- wait for it- $27. You can’t buy an extra-large pizza with drinks for $27. The FOMC will conclude its two day meetings tomorrow, March 16 and either the Fed will raise rates or it won’t. Either way, its’ quite possible not much will happen as a result.