The market reacted badly to the FOMC statement and remarks by Federal Reserve Chairman Powell, sending the 10-year yield and mortgage rates higher.
Powell didn't seem confident while answering questions about inflation and the labor market. He emphasized that the labor market is softening, but hasn’t completely broken.
The Fed raised its inflation forecast to 2.5% PCE for 2025, interpreted as indication of a prolonged higher interest rate environment.
The Fed now plays with elevated mortgage rates and housing starts data, having a small margin of error in its unemployment rate forecast for 2025.
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