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Fannie Mae Forecasts ‘Higher for Longer’ Interest Rates, Inflation
Stronger-than-expected economic and inflation data have pushed interest rates higher and financial markets to price in fewer Federal Reserve rate cuts this year, the Fannie Mae Economic and Strategic Research (ESR) Group said in its April 2024 commentary. The ESR Group nonetheless continues to forecast slowing employment and economic growth, along with progress toward 2% inflation over its forecast horizon.
“Financial markets rapidly repriced their interest rate expectations following hotter-than-expected inflation reports and ongoing strong payroll employment gains,” said Hamilton Fout, VP of economic and strategic research. “While we still expect economic growth and inflation to moderate going forward – and, thus, for mortgage rates to drift downward – interest rates existing in a ‘higher for longer’ state seems to be an increasingly real possibility in the eyes of market participants, as well as some homebuyers and sellers.”
The ESR Group expects the Consumer Price Index to end 2024 at a 3.1% annual rate, up from 2.5% previously projected. It also expects home prices to rise 4.8% in 2024, up 1.6 percentage points from last quarter’s projection, and then another 1.5% in 2025.
- ◦Economy
