Markets reacted to the Federal Reserve increasing the target Fed Funds rate by 75 basis points last week and increasing their projections of future rate levels in 2023. Fed Chair Powell’s comments last week noted a need for restrictive monetary policy in the future with a focus on containing inflation, driving investors to raise their expectations for future interest rates.
Mortgage rates continued to move higher this week, and now have more than doubled this year.
Markets reacted to the Federal Reserve increasing the target Fed Funds rate by 75 basis points last week and increasing their projections of future rate levels in 2023. Fed Chair Powell’s comments last week noted a need for restrictive monetary policy in the future with a focus on containing inflation, driving investors to raise their expectations for future interest rates. Parts of the economy are showing remarkable resilience — jobless claims data last week showed labor markets remain very tight. On the housing front, existing home sales fell month over month and typical home values have declined for two months in a row.
This week markets are focused on comments from numerous Fed officials to ascertain their willingness to endure economic slowdowns to fight inflation. New inflation data coming later in the week could provide further insight into future Fed rate hikes.
