Mortgage rates increased last week, with the average 30-year fixed rate exceeding 5% for the first time since late 2018.

With the release of the Federal Open Market Committee meeting minutes last week, markets got confirmation that the Federal Reserve will be aggressively combatting inflation. The minutes suggest several 50 basis point rate hikes are possible this year. The Federal Reserve’s plan for reducing its balance sheet – its holdings of U.S. Treasuries and mortgage-backed securities – was slightly more aggressive than some market participants expected. Rates increased in response to the hawkish Federal Reserve, while economic data continues to show strong labor markets and inflation pressures.

This week, markets will be reacting to inflation data releases and any developments in Ukraine, which could impact interest rates.