The Federal Open Market Committee has its first meeting of 2010 this week. They will, on Wednesday, influence the market with two items:

• Fed Funds Target Rate: No Change Expected
• Press Release and Policy Statement: This will move mortgage rates.

The Policy Statements that follow these meetings are among the strongest predictors of mortgage rates.

When looking at mortgage rate predictions, you need to take them all with a grain of salt. It’s nearly impossible to identify exactly what mortgage rates will do, but it’s critical to know what will be driving them. This week, it is 100% about the Policy Statement or press release. If the Fed indicates that the economy is rebounding and recovery as they expected, look for interest rates to jump higher. Conversely, if there are lingering concerns or risks, that will possible push rates lower.

The market has already shrugged off a very soft Existing Home Sales report. In a typical week, that would have moved the market. In a Fed Open Market Committee week, it’s usually quiet before the storm.

The only certainty for this week’s mortgage rate predictions is that it will be volatile. We’ll update the current mortgage rates on Wednesday afternoon after the news breaks. This should be a very interesting meeting as the Fed gives us the first opportunity in 2010 to see what they are thinking.