Mortgage rates increased this week as new data showed inflation remains somewhat resilient in the US as well as overseas – dampening hope that monetary policy would ease before year’s end.

Headline CPI declined significantly in March. But core inflation, which strips out prices of food and energy, remains high – still more than twice the Federal Reserve’s 2% target. The annual change in core CPI edged up to 5.6% in March from 5.5% in February, pushing long-term yields upward, along with the mortgage rates they tend to influence. Commentary from Fed officials appeared to reinforce that the central bank will continue to take a hawkish stance to tame inflation. In his latest speech, St. Louis Federal Reserve Bank President James Bullard did much to sow doubt that monetary policy would ease this year. Bullard was also quick to point to a tight labor market and rapidly abating financial stress after recent turmoil in the banking sector.

Of course, much uncertainty remains – the Fed’s own forecast suggests the US economy could fall into a mild contraction this year – but mortgage rate volatility will likely remain elevated until core inflation begins to fall more convincingly towards the Federal Reserve’s inflation target.