The Federal Reserve is unlikely to raise interest rates in November, and there is a minimal chance they will do so in December, according to the Mortgage Bankers Association Chief Economist Mike Fratantoni.
The Federal Reserve may reach its 2% inflation target rate by early 2025 and it is likely done with its restrictive monetary policy, Mike Fratantoni, Mortgage Bankers Association chief economist and senior vice president, said at the Market Outlook session on Sunday at the MBA Annual Conference in Philadelphia. Fratantoni said he did not expect the central bank would raise interest rates in November and said there was a minimal chance they would do so in December.
The Fed has raised interest rates 11 times since March of last year, pushing the federal funds rate to a 22-year high of 5.25% to 5.5% in a bid to lower soaring inflation. The central bank is now in the position to reach its 2% inflation target rate without doing anything more, Fratantoni said.
The U.S. government's fiscal policy has probably weighed heaviest on mortgage rates over the last two months, Fratantoni said. That's because the income the government is taking in has dropped, and outlays are up – in other words, the federal government is taking in less and spending more. Moreover, the deficit is up by about 60% compared to last year, and the government is paying roughly 30% more on interest now than last year.
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