Powell Signals Higher Rates May Be Here to Stay for a bit: What It Means
Last week, Federal Reserve Chair Jerome Powell delivered remarks at the Thomas Laubach Research Conference that signaled an important shift in how the Fed views long-term interest rates and future economic challenges. For those of us keeping a close eye on the housing and mortgage markets, this speech carried a clear message: the days of ultra-low interest rates are behind us — at least for now.
Key Takeaways from Powell’s Speech
Higher Rates Are the New Normal: Powell noted that due to changes in the global economy and an increase in supply shocks (such as those seen during the COVID-19 pandemic and international trade disruptions), the Fed expects real interest rates to remain higher for longer.
Inflation Is Still a Concern: While inflation expectations are mostly in line with the Fed’s 2% target, Powell acknowledged the possibility of more frequent and persistent inflation pressures, meaning the Fed will likely remain cautious in reducing rates.
Policy Framework Review in Progress: The Fed is currently reassessing its approach to managing inflation and employment, revisiting its 2020 “flexible average inflation targeting” strategy. The updated framework will aim to better communicate the Fed’s goals and decision-making during volatile periods.
No Timeline Yet: Powell didn’t give a specific date for when this review will be complete but suggested we could see updates in the coming months, possibly around the Fed’s Jackson Hole conference this summer.
What This Means for the Mortgage and Housing Market
With the *Federal Funds Rates holding steady at 4.25%-4.5% and Powell signaling that lower rates aren’t coming anytime soon, it’s clear that homebuyers and homeowners need to adapt to this new rate environment. Here's how this may affect you:
Buyers: If you're waiting for rates to drop significantly before purchasing, you may be waiting longer than expected. Consider getting pre-approved now to lock in a rate before further market shifts.
Homeowners: If you're thinking about a refinance, a HELOC, or accessing equity, it’s important to explore your options now. Rates may not go much lower — and depending on economic conditions, they could rise further.
Investors: A higher-rate environment typically slows appreciation but can open doors for better buying opportunities in a cooler market.
*The Federal Funds Rate is the interest rate that banks charge each other to borrow money overnight. I.E. - the base price of money for banks.
Final Thoughts
The Fed is navigating a complex post-pandemic economy where uncertainty is the only constant. Powell’s comments suggest a cautious and calculated path forward, where rate cuts will be based on real progress — not hope.
📞 If you're thinking about buying, refinancing, or accessing your home's equity, now is the time to get a plan in place. Let’s talk about your options and build a strategy that works in today’s market — not yesterday’s.
📩 Message me or schedule a free consultation today.
