El Niño could push inflation 1% higher in 2027, Fed study finds
“Inflation is too high, leading central banks to raise short-term rates, while budget deficits and debt are unsustainably high, leading bond investors to push up longer-term rates,” he said.
The FRBSF researchers are careful to frame their projections as a risk, not a certainty. The analysis draws on just 22 historical El Niño episodes since the 1950s, only four of which were as strong as the current one.
Whether a La Niña materializes in 2027 — the key variable driving the projected price increase — remains genuinely uncertain.
What brokers face if the outlook worsens
The study lands on a market already under significant strain. Agents surveyed across the US are warning of 2027 home price drops if mortgage rates stay elevated above 7%, with 67% citing affordability as buyers’ biggest obstacle, according to Real REMAX Group’s September 2026 agent survey.
Samantha Shelton, mortgage broker and president at Align Lending in the US, previously told Mortgage Professional America: “When affordability improves, competition increases. That’s why I often tell clients it’s better to be early and refinance later than wait and enter the market with the Black Friday crowd. A buyer who purchases before the rush may get a better price and still benefit when refinance opportunities open.”
