How did the latest CPI report look?
The latest Consumer Price Index report was released yesterday, and it showed that we’ve made significant progress in the battle against inflation. Over the last 12 months, inflation has risen 2.9%. This is the first time the annual rate is below 3.0% since 2021.
The monthly inflation rate for all items was only 0.2%, and the Core CPI, excluding food and energy costs, was up only 0.2% month-over-month. Airline fares and used cars and trucks were the sectors that saw the greatest improvement.
It’s widely expected that this report was what the Federal Reserve needed to cut rates at their next meeting in September.
What was the reaction in the mortgage market?
The national average rate for a 30-year, fixed-rate mortgage dipped 0.03% to 6.49%*. The cooler than expected inflation data drove a small rally in the bond market and that lead to a small reaction in the mortgage market.
Overall, the response to the inflation data was a bit more muted than usual. The report met expectations, but it didn’t really spur a massive rally.
The next major data point we’ll get is next week’s jobs report.
What’s going to happen at the Fed’s Jackson Hole retreat?
The Federal Reserve board of governors will head to Jackson Hole, WY next week for their annual retreat with central bankers, policy makers, and academics in attendance. The symposium lasts three days and includes a speech from Federal Reserve Chair Jerome Powell.
It’s widely expected that Powell will use the retreat to ‘set the table’ for the September rate cut.
The Fed has seen progress on the inflation front and is expected to shift gears toward the labor market.
Krishna Guha, vice chairman of Evercore ISI, wrote, “This is now a labor data-first Fed, not an inflation data-first Fed, and the incoming labor data will determine how aggressively the Fed pulls forward rate cuts.”
It’s widely expected that Chairman Powell’s speech will reference plans for the future, and detail how he expects to handle interest rates moving forward.
* National average rates as of 8/14/2024 are included for educational purposes only and are not advertised rates from Rate.
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