Inflation slows to 3.1% annual rate in November
The U.S. Labor Department released the monthly Consumer Price Index for November on Tuesday. Inflation increased 0.1% in November and was up 3.1% from last year’s metrics. The core CPI, which excludes food and energy prices, increased 0.3% month-over-month, and 4% from last year.
A 2.3% decrease in energy prices helped the inflation metrics stay lower than they could have been. Gasoline was down 6% and fuel oil was 2.7% lower. Food prices increased 0.2%
Housing metrics declined slightly month-over-month but continues to be one of the stickier aspects of inflation. Housing costs were up 6.5% year-over-year, but are off their peak of over 8% in March 2023.
How did mortgage rates react to inflation?
The national average for a 30-year, fixed-rate mortgage ended the day down 0.01% to 7.09% on Tuesday*. The bond market may have had a greater reaction if it weren’t for tomorrow’s announcement on interest rates from the Federal Reserve and Chairman Jerome Powell’s press conference.
What is The Fed expected to do today?
The Federal Reserve will make an announcement on interest rate changes at 2 PM Eastern time.
Market watchers have the chances of The Fed continuing its rate change pause and keep interest rates where they are at 97.7%. There’s only a 2.3% chance of a rate hike. They’ve also calculated that there’s a 52.7% chance that we see a rate cut by March 2024.
What’s going to push mortgage rates up or down is the tone of the guidance from Fed Chairman Jerome Powell. A dove-ish tone could start a rally and send rates lower, but a hawkish tone has the potential to trigger a sell off and move rates up. The devil, as always, will be in the details.
* National average rates accurate as of 12/12/23 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.
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