Source: The Bharat Express News —
Back in early February, Minneapolis Fed President Neel Kashkari took to CNBC to clarify that easing financial conditions, including mortgage rates that had fallen to 6.09% at the time, could disrupt the Fed’s inflation battle if it saw the economy warm up.
More from Fortune:
“The [U.S.] housing market is starting to show signs of life again as mortgage rates have fallen again,” said Kashkari. “You are right [loosening financial conditions] does make our job of balancing the economy more difficult. All things being equal, that means we need to do more with our other tools.”
In the days following that interview, financial markets tightened again and the average 30-year fixed mortgage rate shot back up to 6.97% as of Friday, as investors realized that improving economic data means the Federal Reserve is likely to raise the federal funds rate higher. will hold longer than previously expected.
Real estate agents and homebuilders had celebrated a slight improvement in transaction levels earlier this year, boosted by lower mortgage rates, but this rebound in mortgage rates means the US housing market could face an extended period of sluggishness in terms of activity.
