Mortgage rates fell this week, retreating in recent days to their lowest level in two weeks.

In a relatively quiet week in economic data and pandemic-related developments, there didn’t appear to be much reason for a meaningful move in rates. And yet, the downward shift in mortgage rates was the most pronounced since the market reacted to April’s lackluster jobs data, likely driven by commentary from central bank officials on both sides of the Atlantic. Statements from Federal Reserve Presidents and the President of the European Central Bank indicated to markets that the central banks remain relatively undeterred by recent sharp increases in inflation and are confident in their ability to curb the impacts of rising prices without slamming the brakes of the economic recovery. Prior to the comments, bond yields and mortgage rates had been tip toeing upward in the past couple weeks as investors grew increasingly confident that stronger-than-expected inflation would indeed force the Fed to tighten policy sooner than they had previously stated.

That said, despite the reassurances, central banks remain in a delicate position as they try to manage monetary policy in a way that simultaneously supports more labor market growth and guards against inflation. And it won’t get any easier in the coming days. The next batch of inflation data – due this Friday – will once again thrust the Fed into the spotlight and another strong release could throw mortgage rates firmly back upward.