{"id":10996,"date":"2024-05-14T19:20:48","date_gmt":"2024-05-14T19:20:48","guid":{"rendered":"https:\/\/topat10.com\/?p=10996"},"modified":"2024-05-14T19:20:48","modified_gmt":"2024-05-14T19:20:48","slug":"jerome-powell-says-its-different-this-time-and-americans-and-their-mortgage-rates-are-a-key-reason-why","status":"publish","type":"post","link":"https:\/\/topat10.com\/?p=10996","title":{"rendered":"Jerome Powell says it\u2019s \u2018different this time\u2019\u2014and Americans and their mortgage rates are a key reason why"},"content":{"rendered":"\n<p>Federal Reserve Chair Jerome Powell said Tuesday that the central bank is\u00a0<a href=\"https:\/\/apnews.com\/article\/federal-reserve-interest-rates-inflation-mortgages-52156f98736527a254d5717b83e219f2\" target=\"_blank\" aria-label=\"Go to https:\/\/apnews.com\/article\/federal-reserve-interest-rates-inflation-mortgages-52156f98736527a254d5717b83e219f2\" rel=\"noopener\" class=\"sc-330a5589-0 gPJZJS\">unlikely to raise<\/a>\u00a0its key interest rate in response to signs of\u00a0<a href=\"https:\/\/apnews.com\/article\/inflation-prices-rates-economy-federal-reserve-biden-f02b969d1b44a7ccb0385be03f766de0\" target=\"_blank\" aria-label=\"Go to https:\/\/apnews.com\/article\/inflation-prices-rates-economy-federal-reserve-biden-f02b969d1b44a7ccb0385be03f766de0\" rel=\"noopener\" class=\"sc-330a5589-0 gPJZJS\">stubborn inflation<\/a>\u00a0and underscored his view that price increases would soon start to cool again.<\/p>\n<div>\n<p>Yet Powell, during a panel discussion in Amsterdam, said his confidence that inflation will ease \u201cis not as high as it was\u201d because price increases have been persistently hot in the first three months of this year. Powell stressed that the Fed\u2019s preferred approach was to keep its benchmark rate at its current two-decade peak rather than increase it.<\/p>\n<p>\u201cI don\u2019t think that it\u2019s likely, based on the data that we have, that the next move that we make would be a rate hike,\u201d Powell said. \u201cI think it\u2019s more likely that we\u2019ll be at a place where we hold the policy rate where it is.\u201d<\/p>\n<p>Financial markets and economists have been hoping for signs that one or two Fed rate cuts might be coming this year, given that inflation is down sharply from its high in 2022. But with price pressures still elevated, Powell and other Fed officials have signaled that no rate cut is likely anytime soon.<\/p>\n<p>Powell spoke hours after a report on U.S. producer prices showed that\u00a0<a href=\"https:\/\/apnews.com\/article\/inflation-federal-reserve-powell-c8c2bf0556446c1c4c858f6fc2f877ea\" target=\"_blank\" aria-label=\"Go to https:\/\/apnews.com\/article\/inflation-federal-reserve-powell-c8c2bf0556446c1c4c858f6fc2f877ea\" rel=\"noopener\" class=\"sc-330a5589-0 gPJZJS\">wholesale inflation picked up in April<\/a>. On Wednesday, the government will issue the latest monthly report on consumer inflation, which is expected to show that price growth cooled a bit last month.<\/p>\n<p>In his remarks Tuesday, Powell downplayed the wholesale price report, which also showed that some costs cooled last month, including for airfares, hospital visits and car insurance.<\/p>\n<p>\u201cI wouldn\u2019t call it hot,\u201d he said of the wholesale inflation data. \u201cI would call it sort of mixed.\u201d<\/p>\n<p>Economists are divided over whether the high inflation figures this year reflect a re-acceleration in price growth or are largely echoes of pandemic distortions. Auto insurance, for example, has soared 22% from a year ago, but that surge may reflect factors specific to the auto industry: New car prices jumped during the pandemic, and insurance companies are now seeking to offset the higher repair and replacement costs by raising their premiums.<\/p>\n<p>Other economists point to consistent consumer spending on restaurant meals, travel and entertainment, categories where in some cases price increases have also been elevated, possibly reflecting strong demand.<\/p>\n<p>Powell said that upcoming inflation reports will reveal whether such factors are keeping inflation high or whether inflation will soon fall back to the Fed\u2019s 2% target, as he said he expects. Inflation, which peaked at 9.1% in the summer of 2022, is forecast to slow to 3.4% in Wednesday\u2019s latest report.<\/p>\n<p>The Fed chair noted that rising rents are one key factor keeping inflation high. He called that \u201ca bit of a puzzle\u201d because measures of new apartment leases show new rents barely increasing. Such weaker data has apparently yet to flow into the government\u2019s measures, which cover all rents, including for tenants who renew their leases. Though rents are still growing faster for tenants who renew leases, Powell said the government\u2019s measures should eventually show rent growth easing.<\/p>\n<p>The Fed chair also acknowledged that the economy \u201cis different this time\u201d because so many Americans refinanced their mortgages at very low rates before the Fed began raising borrowing costs in March 2022. Many large businesses also locked in low rates at that time.<\/p>\n<p>\u201cIt may be,\u201d he said, that the Fed\u2019s rate policy \u201cis hitting the economy\u00a0<a href=\"https:\/\/apnews.com\/article\/federal-reserve-interest-rates-inflation-mortgages-52156f98736527a254d5717b83e219f2\" target=\"_blank\" aria-label=\"Go to https:\/\/apnews.com\/article\/federal-reserve-interest-rates-inflation-mortgages-52156f98736527a254d5717b83e219f2\" rel=\"noopener\" class=\"sc-330a5589-0 gPJZJS\">not quite as strongly<\/a>\u00a0as it would have if those two things were not the case.\u201d<\/p>\n<p>Last week,\u00a0<a href=\"https:\/\/apnews.com\/article\/federal-reserve-interest-rates-inflation-mortgages-52156f98736527a254d5717b83e219f2\" target=\"_blank\" aria-label=\"Go to https:\/\/apnews.com\/article\/federal-reserve-interest-rates-inflation-mortgages-52156f98736527a254d5717b83e219f2\" rel=\"noopener\" class=\"sc-330a5589-0 gPJZJS\">Fed officials underscored<\/a>\u00a0that they were prepared to leave their key interest rate at 5.3%, the highest level in 23 years, as long as needed quell inflation.<\/p>\n<\/div>\n<div data-cy=\"subscriptionPlea\">Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. <a href=\"https:\/\/www.fortune.com\/newsletters\/cfodaily?&amp;itm_source=fortune&amp;itm_medium=article_tout&amp;itm_campaign=cfo_daily\" target=\"_self\" aria-label=\"Go to https:\/\/www.fortune.com\/newsletters\/cfodaily?&amp;itm_source=fortune&amp;itm_medium=article_tout&amp;itm_campaign=cfo_daily\" class=\"sc-330a5589-0 gPJZJS\" rel=\"noopener\">Sign up<\/a> for free.<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Federal Reserve Chair Jerome Powell said Tuesday that the central bank is\u00a0unlikely to raise\u00a0its key interest rate in response to signs of\u00a0stubborn inflation\u00a0and underscored his view that price increases would soon start to cool again. Yet Powell, during a panel discussion in Amsterdam, said his confidence that inflation will ease \u201cis not as high as [&hellip;]<\/p>\n","protected":false},"author":421,"featured_media":10997,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[123],"tags":[],"class_list":["post-10996","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Jerome Powell says it\u2019s \u2018different this time\u2019\u2014and Americans and their mortgage rates are a key reason why | Unlock Informed Choices with Us<\/title>\n<meta name=\"description\" content=\"But the Fed chair &quot;wouldn&#x27;t call it hot,&quot; saying the wholesale inflation report 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