Mortgage rates fell sharply this week, retreating to their lowest level since September, and appear poised to fall further ahead of next week’s key update on inflation.

In a week chock full of blockbuster economic data, this week’s rate decline was due primarily to a statement from Federal Reserve Chair Jerome Powell last Wednesday. There he noted the Fed had seen signs that inflation was continuing to cool and hinted the central bank was ready to scale back on their program of tightening monetary policy. The inflation dynamic remains investors’ chief focus; mortgage rates barely budged in response to the monthly jobs report, a release that usually tends to move markets. It’s unlikely that this mindset will change before next week — when another inflation update and statement from Chair Powell will be shared – but recent rate movements indicate that markets are evaluating their positions as those important releases approach. Data released on Wednesday showed labor costs were much cheaper than expected in the year’s third quarter, something the market may be interpreting as more signs of waning inflation. Bond yields and mortgage rates fell in response.

All told, it was another good week for mortgage rates, but more volatility looms around the corner.