The March CPI came in hotter than expected, pushing mortgage rates to their highest level since November. Austin Klar says this likely eliminates one of three projected Federal Reserve rate cuts this year, meaning higher rates could stick around longer. The PCE index is closer to the Fed's target, so cuts aren't off the table, just fewer than hoped.
Absolutely brutal week for anyone in the housing market. Consumer Price Index, one of the key inflation metrics, came in higher than expected for March, causing interest rates to shoot up to the highest levels we've seen since last November and one of the biggest single-day jumps we've seen in the last 18 months. The reading most likely takes off the table one of the 3 projected Federal Reserve rate cuts this year, and it most likely means that mortgage interest rates are gonna be higher than anticipated for longer than anticipated. Now, there are some silver linings here. The CPI data only came in 0.1% higher than expected, and the Federal Reserve really pays more attention to PCE, the personal consumption Consumption Expenditure Index more than CPI. And as you can see in the bottom graph, that's been trending recently in the 2% range, which is the Federal Reserve's inflation target. So no, the world isn't melting. Rate cuts are still on the table, but not as many as previously anticipated. And the latest numbers definitely point to stickier inflation than we all hoped. Follow me for more market updates.
