If there is any doubt that the from the Federal Reserve A half-point rate cut was the right move, these doubts are fading and there is reason to support another cut in the coming months.
That’s because the The US Bureau of Labor Statistics The consumer price index (CPI) for September fell by 0.1 percentage point compared to August and is at a measured 2.4% on an annual basis. On an annual basis, core inflation – which excludes food and energy costs – rose by 3.3%, which is 0.1 percentage point higher than in August.
The year-on-year figure for shelter costs – which weighs a third of the index – also fell to 4.9% from 5.2% in August to 4.9% in September, and has fallen by from the peak of 8.2% in March 2023. responsible for 65% of core inflation in September.
“With the trading markets currently pricing in two 25 basis points [interest rate] cuts – one each in November and December – and continued signs that inflation is easing, it appears that markets are correctly pricing these cuts,” he said. Realtor.com Senior economist Ralph McLaughlin said in a statement. “As a result, we are likely to see 10-year government bonds stabilize. This should lead to relatively stable mortgage rates until PCE data – the Fed’s preferred inflation measure – is released later this month.”
Despite inflation approaching the Fed’s 2% inflation target, the CPI report sends a somewhat mixed signal compared to last week’s jobs report, which showed an additional 254,000 nonfarm jobs in September. That number is higher than the monthly average of 203,000 additional jobs over the past twelve months. Wage growth also accelerated to 4% in September.
The Fed waited for the labor market to soften before cutting rates. That seemed to be happening in the run-up to September, but last week’s report showed the opposite. Still, as inflation rates continue to cool or at least level, economists are optimistic that more rate cuts will happen before the end of the year.
“What does all this economic data mean for potential home buyers and sellers this fall?” asked Clear MLS Chief Economist Lisa Sturtevant said in a statement. “Lower inflation indicates that mortgage rates will fall further this fall. However, mortgage rates are influenced by broader economic conditions. If labor market conditions continue to exceed expectations, we could see mortgage rates rise or at least not fall further. We already saw a rise in mortgage rates this week, due to the strong jobs report.”
Mortgage rates rose to 6.35% on HousingWire’s Mortgage Rates Center on Wednesday, and to 6.67% on Mortgage News Daily.
