After staying flat for much of the past week, mortgage rates dropped sharply in recent days to their lowest levels since August. Markets are usually quiet leading into meetings of the Federal Reserve’s Open Market Committee, but this week proved different, reflecting growing uncertainty about the Fed’s moves in 2019.

Substantial losses in the stock market, combined with softened inflation expectations caused by rapidly falling oil prices, sent rates lower.

This recent volatility in global financial markets has had an impact on rates, but it has yet to spill over into the real economy: Unemployment remains at historically low levels, economic growth is still robust, and many consumers continue to enjoy the fruits of tax cuts. Wednesday’s announcement by the Federal Reserve – to raise interest rates but temper expectations for future decisions – suggests that monetary policymakers are willing to look past short-term volatility and instead focus on longer-term economic growth when considering the appropriate path of interest rates.

In addition to the Fed news, Wednesday’s unexpectedly strong release of existing home sales data provided welcome relief for a housing market that has been a sore spot in the overall 2018 economy. It delays, at least for now, fears that a softening housing market could herald looming weakness.

The week between Christmas and New Year’s is historically very quiet in financial markets, although volatility can be magnified by low trading volumes. Markets are not expecting meaningful shifts in rates over the holiday, but the outlook for 2019 suggests an increasingly uncertain path.