Fed preview: Rate hike ‘not completely off the table’ says senior economist
Beyond the rate decision, Williamson said the change in how the Fed communicates is itself worth watching. Chair Kevin Warsh has been explicit about his skepticism of forward guidance, the practice of telegraphing future rate moves, and for brokers advising clients on rate lock timing, that shift matters as much as whatever the Fed announces Wednesday.
Williamson said the volatility implications of that shift are direct, since a CPI print, an employment report, or a Fed governor’s speech can now move rates in ways that would previously have been dampened by explicit guidance.
“Less forward guidance puts more weight on incoming economic data, potentially increasing volatility in Treasury yields and mortgage rates as each new inflation or employment report arrives,” he said. “Even so, economists will still have plenty of inter-meeting signals to interpret from Fed speeches, public appearances and meeting minutes.”
The impact of higher rates
Charles Goodwin, vice president and head of bridge and DSCR lending at Kiavi, said the current rate range is likely to hold.
“Mortgage rates have increased back into the 6.60-6.70% range due to inflation expectations and hawkish commentary from the Fed,” Goodwin said. “Expect rates to stay in this range barring any breakthroughs in the Middle East, easing inflation data, or very weak labor data.”
