Last week’s economic reporting was minimal due to the Labor Day Holiday. Fed Chair Jerome Powell Weekly readings on mortgage rates and jobless claims were also released.
Fed Chair: Rates Expected to Remain Higher
Chair Powell said that interest rates will remain high for a longer than expected time as “history cautions against prematurely loosening [monetary] policy.” The Federal Reserve has a legislative mandate to maintain its target interest rate range at or near 2 percent, During a discussion at the Cato Institute, Chair Powell said that the longer inflation remains above the target rate range the more likely the public will view high inflation as normal.
Chair Powell addressed concerns about political influence on Fed policy. “ I can assure you that we never take into consideration external political considerations.” While President Biden supports the Fed’s policies, Massachusetts Senator Elizabeth Warren expressed concern that too many rate hikes could raise unemployment. Chairman Powell would not indicate how much the Fed may raise rates at its next monetary policy meeting on September 21 but analysts said the rate hike would likely be 0.75 percent or 0.50 percent at the least.
Mortgage Rates Rise, Jobless Claims Mixed
Freddie Mac reported higher mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose by 23 basis points to 5.89 percent. Rates for 15-year fixed-rate mortgages averaged 5.16 percent and were 18 basis points higher than in the previous week. Rates for 5/1 adjustable rate mortgages averaged 4.64 percent and were 13 basis points higher on average. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.80 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent.
New jobless claims fell to 222,000 initial claims filed last week as compared to the previous week’s reading of 228,000 new jobless claims filed. 1.45 million continuing jobless claims were filed last week as compared to the previous week’s 1.44 million ongoing claims filed.
This week’s scheduled economic reporting includes readings on month-to-month and annual inflation, retail sales, and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be released.