This week saw a significant increase in mortgage rates, with various terms rising by between 0.25% and 0.375%. The 30-year fixed mortgage rate has now reached 6.375%. On October 21, key officials from the Federal Reserve, including Lorie Logan, president of the Dallas Fed, Jeffrey Schmid, president of the Kansas Fed, and Mary Daly, president of the San Francisco Fed, signaled that the Fed intends to continue lowering rates.
During her speech at the Wall Street Journal’s TechLive conference, Daly indicated that the Fed may further decrease interest rates to prevent additional weakness in the labor market. She noted, “So far, I haven’t seen any information suggesting we won’t continue to lower rates. For an economy on the track toward a 2% inflation target, interest rates are significant, and I don’t want to see the labor market worsen further.”
Last month, the Fed made its first rate cut since the onset of the pandemic, reducing the benchmark rate by half a percentage point. Subsequent economic data has shown that hiring in recent months has been stronger than initially reported, leading to expectations that the Fed will enact a smaller rate cut of a quarter percentage point during its upcoming policy meeting on November 6-7.
Daly emphasized that the decision between a half-point and a quarter-point cut was a “close call,” but she strongly favored the former.
Logan also hinted that the Fed will continue to lower rates and suggested there is no reason to stop the Reserve from advancing its plan to reduce its balance sheet simultaneously.
