The U.S.Federal Reserve doesn’t set mortgage rates, but the financial markets, and Orion and our AEs, pay a great deal of attention to what the Fed thinks and does.

Federal Reserve Chair Jerome Powell still expects 2024 interest rate cuts, but said the central bank won’t move until it is confident inflation is moving sustainably toward its 2 percent target... But he did tell Congress the Fed wasn’t far from cutting rates. While the Fed's restrictive monetary policy is putting pressure on economic activity and inflation, cutting interest rates "too soon" could cause damage. That was according to testimony last week from Jay Powell, who reiterated before Congress that there was no evidence the economy was falling into a recession. It may also be appropriate to "begin dialing back policy restraint at some point this year," but the central bank needs"greater confidence that inflation is moving sustainably toward 2 percent."

Despite the Federal Reserve making its intentions clear, that doesn’t mean we won’t have economic news every week that investors and traders follow. This week’s February consumer price index report is important, for example. Look for headline CPI to rise 0.4 percent month-over-month for February and be up 0.3 percent once the food and energy categories are stripped out. Inflation is expected to show a 3.1 percent year-over-year increase for the month, much lower than the 8-9 percent from a couple years ago. Other economic reports that are due to be released include the producer price index report, the retail sales report, and the latest reading from the University of Michigan on consumer sentiment.

After adding it all up, investors may walk away with new interest rate expectations. Notthat they’re any smarter than the rest of us, but Goldman Sachs thinks the first rate cuts from the Federal Reserve, European Central Bank, Bank of England, and Bank of Canada will be in June. Meanwhile, enjoy the “softlanding.”

Meanwhile, President Joe Biden has floated plans to address the country’s affordable housing issues, including new tax breaks for first-time homebuyers and “starterhome” sellers. However, experts have mixed opinions on the proposals. “I know the cost of housing is so important to you,” Biden said during his State of the Union speech last week. “If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting.”

Biden has proposed a “mortgage relief credit” of $5,000 per year for two years for middle-class, first-time homebuyers, which would be equivalent to lowering the mortgage interest rate for a median-price home by 1.5 percentage points for two years, according to an outline released by the White House on Thursday.

The administration is also calling for a one-year credit of up to $10,000 for middle-class families who sell their “starter homes” to another owner-occupant. They define starter homes as properties below the median price for the seller’s county.

At this point these are proposals, but Orion’s management and Account Executives are watching them carefully and hopeful that any measures implemented by the government will help our brokers help your borrowers!

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