As mortgage rates surge and everyone awaits the Federal Reserve’s next move, market watchers are fixated on the dramatic rise in consumer prices. Inflation, and the Fed’s response to it, will drive mortgage rates in the coming year.
“Inflation, inflation, inflation,” says Greg McBride, Bankrate’s chief financial analyst. “That’s really the hub on the wheel.”
Inflation jumped to 7.9 percent in February — and that was before the Biden administration’s sanctions on Russia pushed energy prices higher. With consumer prices surging, the Fed is all but certain to raise rates seven times this year, says Diana Furchtgott-Roth, an adjunct professor of economics at George Washington University and former chief economist at the U.S. Department of Labor.
