Mortgage Rates Fall As Slowing Economy And Fed Rate Cuts Weigh On The Mind Of Investors And Fed Officials

Home shoppers are getting some slight relief as mortgage rates are now comfortably below the 7% mark.They could stay below that threshold if next week’s inflation data continues to move in the right direction. The latest data shows inflation is continuing to fall. As inflation and inflation expectations move lower, the current Fed policy stance has become more restrictive and could risk damaging a labor market that has so far supported consumers.

A number of Federal Reserve officials have reinforced the consensus view that as inflation continues to cool – like it has over the past three months – the time to ‘lower the policy rate is drawing closer,’ as Federal Reserve Governor Christopher Waller said. Treasury yields and the mortgage rates that tend to follow them could ease further, especially if the labor market shows signs of loosening further.

Next week’s release of the latest Personal Consumption Expenditures (PCE) data will likely cause investors to re-adjust their inflation forecasts. Any uptick in core inflation – measured by the PCE price index – could cause rates to move back up.