Source: Fortune —
This spring, the Fed dusted off the ole inflation-fighting playbook. It goes like this: The central bank applies upward pressure on long-term interest rates—including mortgage rates—through signaling that short-term rates will soon rise. Those spiking mortgage rates then push both home sales and homebuilding lower. That causes demand for commodities (like lumber and concrete) and durable goods (like countertops and refrigerators) to fall. Those economic contractions then spread throughout the rest of the economy and, in theory, help to curtail inflation.
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