Key Points:
- The Fed’s marathon of monetary policy decisions has taken quite a direction change, as they are now expected to cut rates not thrice, as the grown-ups in suits had originally planned, but instead, at least six times.
- The odds have been shaken up, from a modest betting-on-black three to a don’t-tell-your-spouse-about-this 85% chance of at least six rate cuts. The House always wins, they say, but this time it appears the economy wants a Say!
- The sobering trigger for this drastic shift? A seldom-celebrated, typically-overlooked metric of inflation that has decided to add excitement to our lives by unveiling that the economy is, in fact, cooling faster than an ice cream melting in Antarctica.
Hot Take:
So, what do we have here? It would seem our indomitable Fed, the economic superhero of our tale of modern capitalism, is finally accepting that the baddie named ‘Inflation’ might have more surprises in store. But wait… Isn’t lower inflation generally a good thing, like getting extra toppings on your pizza, or finding a ten-dollar bill in your jeans’ pocket while doing laundry?
Well, the answer, my dear readers, is “Yes but, actually, no”. See, lower inflation might appear the charming hero we pine for, but it also sometimes carries a wicked curse. It signals an economy that’s cooling quicker than the lukewarm interest in last year’s hit Youtube challenge.
And so, our knight in shining armor (the Fed, remember?), has been forced to change course and double down. More rate cuts? Sure! Why not go from a hat-trick straight to a touchdown? Classic move! Let’s just hope that these cuts don’t turn the cooling economy into a chilly wintry mess for us all. Time to bundle up, folks! There could be an economic blizzard brewing that no amount of hot cocoa can ward off! But hey, hanging on to your hat in the financial hailstorm can make a great Insta-story, right? #RealEstateRumble.
Original article: https://www.inman.com/2023/12/27/mortgage-rates-are-in-free-fall-as-economy-continues-to-cool/
