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February inflation report expected to show another ‘strong’ monthly increase
Former Kansas City Federal Reserve Bank President Thomas Hoenig reacts to Jerome Powell saying the Fed is not ready to start cutting rates on ‘Cavuto: Coast to Coast.’
A closely watched inflation report due Tuesday is expected to show that progress in fighting price pressures within the economy slowed again in February.
Economists expect the consumer price index, which measures a range of goods that includes gasoline, health care, groceries and rent, to show that prices rose 3.1% in February – unchanged from the previous month.
On a monthly basis, inflation is seen rising 0.4%, which is higher than the 0.3% figure recorded in January, thanks to an uptick in energy prices.
“We expect [the report] to show another strong monthly increase,” said Brian Rose, senior U.S. economist at UBS Global Wealth Management.
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Other parts of the report are also expected to point to a slower retreat in inflation. Core prices, which exclude the more volatile measurements of food and energy, are projected to climb 0.3%, or 3.7% annually. Those figures are down slightly from the 0.4% monthly figure and 3.9% headline gain in January, suggesting that underlying price pressures remain strong.
The Federal Reserve’s target rate is 2%.
“The CPI index likely ran hot in February on higher gasoline prices, but core inflation likely slowed further as car prices fell and rent increases moderated,” said Bill Adams, chief economist for Comerica Bank.
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A customer visits a supermarket in San Mateo, California, on Dec. 12, 2023. (Photo by Li Jianguo/Xinhua via Getty Images / Getty Images)
The central bank is closely watching the report for evidence that inflation is finally subsiding as policymakers try to gauge what comes next for interest rates in 2024.
Central bank officials have opened the door to cutting interest rates this year, but have pushed back against the market’s aggressive expectations. Fed Chair Jerome Powell said last week while testifying on Capitol Hill that policymakers are on track to cut interest rates sometime in 2024, but are not ready to do so until they are confident inflation is tamed.
“The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” Powell said.
Central bank officials are also taking into consideration job growth and consumer inflation expectations when setting monetary policy.
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Inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations.
While inflation has fallen from a peak of 9.1%, when compared with January 2021 – shortly before prices began to spike – the consumer price index is up a stunning 18.13%.
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As we look ahead to 2024, many homeowners and prospective buyers are wondering what to expect when it comes to mortgage rates. The landscape of the housing market is constantly changing, so it’s important to stay informed about trends and predictions. In this blog post, we will discuss some factors that could impact mortgage rates in 2024 and what homeowners and buyers can expect.
One factor that could impact mortgage rates in 2024 is the overall state of the economy. If the economy is strong and growing, we may see higher mortgage rates as the Federal Reserve looks to combat inflation. On the other hand, if the economy is stagnant or in a recession, we may see lower mortgage rates as the Fed looks to stimulate growth. It’s important to keep an eye on economic indicators such as GDP growth, unemployment rates, and inflation to get a sense of where mortgage rates may be heading.
Another factor that could impact mortgage rates in 2024 is Federal Reserve policy. The Fed plays a key role in setting interest rates, and their decisions can have a ripple effect on mortgage rates. If the Fed decides to raise interest rates in response to inflation, we may see an increase in mortgage rates. Conversely, if the Fed decides to lower interest rates to stimulate growth, we may see a decrease in mortgage rates. Keeping up with the latest news and announcements from the Fed can give homeowners and buyers a sense of where mortgage rates may be heading.
In terms of specific cities and local mortgage companies, it’s important to note that mortgage rates can vary depending on location and lender. For example, in a city like New York City, where real estate prices are high, mortgage rates may be higher compared to a city like Indianapolis, where real estate prices are lower. Additionally, local mortgage companies may offer competitive rates and terms compared to national lenders. For example, in New York City, local lenders like Quontic Bank and CrossCountry Mortgage may offer specialized products and services tailored to the needs of local buyers.
It’s important for homeowners and buyers to shop around and compare rates from multiple lenders to ensure they are getting the best deal. Websites like Bankrate and LendingTree can be helpful resources for comparing rates and terms from multiple lenders. Homeowners and buyers should also consider working with a mortgage broker who can help them navigate the lending process and find the best mortgage product for their needs.
In conclusion, predicting mortgage rates in 2024 is not an exact science, but there are several factors that could impact rates. By staying informed about economic indicators, Federal Reserve policy, and local market trends, homeowners and buyers can make informed decisions about their mortgage. Shopping around and comparing rates from multiple lenders is key to ensuring you are getting the best deal on your mortgage. Whether you’re looking to refinance your existing mortgage or buy a new home, it’s important to stay informed and be proactive in managing your mortgage.
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