The Fed holds the key to lower mortgage rates
Who holds the key to lower mortgage rates? The Federal Reserve.
And the Fed isn’t going to think about cutting the Fed Funds Rate until they see core inflation, which removes food and energy prices, convincingly heading towards their target of 2%.
Recently, the core inflation reading continued to decline to a rate of 4.3% in August. While that’s a significant improvement from almost 7%, it’s still above the Fed’s 2% target.
Will the progress we’ve seen be enough for the Fed? It may be enough for the Fed to stop hiking, but we will likely need a bit more progress in inflation and some weaker employment numbers for them to consider cutting rates.