Trump is seeking lower interest rates after the release of the CPI report in January. Powell says the Fed won’t hurry to cut the fees, and bond market investors who fund mortgages are taking him with him in his words.
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Mortgage fees are rising again after major inflation calculations get hotter than expected on Wednesday, and Federal Reserve Chairman Jerome Powell said he won’t expect lawmakers to cut more interest rates soon. I warned him.
The latest reading from the Consumer Price Index (CPI) showed prices rose by 3% per year in January. This is the fourth consecutive move from the Fed’s 2% inflation target, the Bureau of Labor Statistics reports.
CPI has risen after falling to 2.4% in September. The latest increase due to rising costs of shelters, energy and food has been a surprise to many economists. Annual updates of seasonal factors may exaggerate the monthly increase of 0.5%.
Powell submitted a federal government’s six-annual monetary policy report to Congress on Tuesday, telling members of the Senate Banking Committee that policymakers “don’t have to hurry” to cut interest rates. Ta. Powell explained to members of the House Financial Services Committee on Wednesday.
President Trump put a strong emphasis on social media after CPI data was released in January, saying, “We need to lower interest rates. Rock and Roll, America, America!!”
Yields on the 10-year Treasury bond, a barometer of mortgage rates, rose 10 basis points on Wednesday. This is a movement that is likely to be reflected in the mortgage rate. The best blue data is a day behind, but data tracked on Mortgage News Daily showed interest rates on the 30-year loan rose by eight base points on Wednesday.
The Fed has cut short-term interest rates in the last four months of 2024, but long-term interest rates on mortgages and government debt will be determined by bond market investors.
Mortgage fees are rising
Mortgage rates were 7.05% on January 14, according to rate lock data tracked in optimal blue after the Fed began cutting rates in September. has risen to.
After returning to below 7% on February 6th and back to 6.78% in 2025, the 30-year fixed-rate mortgage rate has risen again, with an average of 6.83% on Tuesday.
Some investors and economists are concerned that the Trump administration’s plans to impose tariffs, cut taxes and deport millions of immigrants will rekindle inflation.
In a February 5 interview with Fox Business Host’s Larry Kudlow, Treasury Secretary Scott Bessent said the Trump administration’s strategy to combat inflation officials to reduce energy costs by boosting US oil production is I stated.
Tariffs are a “means to the end” to bring manufacturing back to the US, Bescent said that as production returns to the US, “it would theoretically become a shrinking ice cube.”
The extension of the 2017 tax cuts signed to the law by Trump should involve spending cuts, the Treasury Secretary said.
A weekly survey of lenders by the Mortgage Bankers Association found that last week’s lower mortgage fees increased refinancing applications, but demand for mortgages remained weak.
Refinance requests increased 10% in a week, up 33% over a year, according to an MBA survey, purchase loan applications are seasonally adjusted by 4% over a week, up just 2% over a year I did.
Rebound inflation
“All Items” CPI has increased by 3% from a year ago in January, while core CPI, which excludes volatile food and energy prices, has skyrocketed, up 3.3% over the past 12 months.
Pantheon Macroeconomics chief US economist Samuel Tombs said in a note to clients that Pantheon Macroeconomics chief Samuel Tombs said the Fed’s seasonal adjustments at the beginning of the year were disruptive and out of the month’s data. It is dangerous to insert it.
The Fed’s preferred inflation gauge, the Personal Consumption Expense (PCE) Price Index, is close to the Fed’s 2% target, far below the post-pandemic high of 7.25% registered in June 2022.
“This forecast and the likelihood of revisions to the data for January 2024 suggest that core PCE inflation in January has dropped to perhaps 2.7% from 2.8% in December,” Tombs said. It’s there. “As expected, we’re still thinking if the trend continues to slow down in the coming months. [Fed policymakers] We will relax our policy again in June. ”
CME FedWatch tool, which tracks Futures Market and assesses the potential for investors’ future Fed moves, saw only a 42% chance of a June Fed rate cut on Wednesday, with 59% on Tuesday It showed a decrease from 74% in February. 5.
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