Fed’s Barr puts rate hike on the table if inflation stalls
Fed Chairman Kevin Warsh, speaking last week at the Kansas City Fed’s annual Jackson Hole symposium, put the same case plainly. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh said. “Otherwise, we have work to do.”
Samantha Shelton, mortgage broker and president of Align Lending, told Mortgage Professional America before the July meeting that a hike “wouldn’t surprise me if there was a little bit of a hike due to renewed inflation concerns, tied to energy prices and the Fed’s desire to reinforce its commitment to price stability.”
What brokers can do now
Barr’s rate warning arrived inside a speech on financial inclusion for individuals with criminal records, a topic that points originators toward an underserved demand pool.
He urged lenders to adopt cash flow-based underwriting and alternative financial data, citing Federal Reserve survey evidence that people with prior convictions are 16 percentage points less confident about loan approval yet 10 percentage points more likely to have applied for credit in the past year.
For lenders who have watched the GDP slowdown and persistent inflation close the door on near-term rate cuts, alternative underwriting offers a way to build volume without waiting on the central bank.
