Lenders are feeling the pinch too: “Also, what’s happening is your lenders are also trying to struggle through the fact that volumes are way down.”
So what should we expect?
All this we know, with the factors leading to higher rates by now well documented. But to glean some optimism from this mix is something different, particularly coming from someone who’s been in the thick of it. “However, we’ve seen some mixed messages or information come out,” he said. “You’ve seen signs of inflation slowing down, the labor market cooling so there’s some optimism in the marketplace,” he said.
To be sure, the Fed has succeeded in bringing the inflation rate down through an aggressive raising of interest rates. The US inflation rate stands at 3.67% — up from 3.18% last month but considerably down from the 8.26% level reached last year, as YCharts has tracked. The current rate is higher than the long-term average of 3.28%. The Fed’s goal of bringing inflation down to 2% has remained elusive.
Stated simply, the US inflation rate is the percentage in which a basket of goods and services purchased in the US increased in price over a year. It’s a key gauge by which the Fed determines the health of the economy. At least rates-wise, take comfort we’re past the early 1980s iteration of inflation when rates rose as high as 14.93%.
But back to now: “The Federal Reserve hopefully will pause rates,” Pawlowski said. I don’t see them reducing rates or doing any kind of easing anytime soon; I probably would expect that to occur towards the middle of next year or the end of next year. But, I think if the Fed gets off the increased rates and gets more consistent data coming through – because right now with the mixed bag of data, the Fed still has a green light to raise rates – you can get to a place where they will pause that stance and I think you can see rates start to come back down.”
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