Mortgage Rates Rise on Surprising Jobs & Inflation Data

Mortgage rates rose over the past seven days, sharply fluctuating in response to unexpected readings of crucial economic data.

After a relatively uneventful few weeks for rates, the surprising results from the April jobs report and inflation data sparked sharp movements in mortgage rates. For now, rates are only slightly above where they were this time last week, but any downward momentum that has been building over recent weeks appears to have been halted. The results of the two reports place the Federal Reserve in a difficult position and adds fresh uncertainty to mortgage rates’ path forward. While Friday’s weaker-than-expected jobs report helped to bolster the central bank’s stance of maintaining loose monetary policy until more progress is made in the labor market, Wednesday’s inflation figures are perhaps the toughest test yet of the Fed’s commitment to this approach. In theory, a steep uptick in inflation would force the central bank to tighten policy by hiking interest rates or slowing the pace of bond purchases.

But for now, Fed officials have downplayed the risks associated with Wednesday’s report, asserting that the sharp increase in prices will be temporary. Any  shifts away from this outlook will place more upward pressure on mortgage rates.

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