As the final week of 2023 closes, analysts believe that inflation may fall even quicker than expected and will force the Fed to reduce interest rates even faster than what is already expected. The market has already baked in a ¾% interest rate decrease early on in 2024.
The Personal Consumption Price Index published last week showed signs of just that, decreasing annualized interest rates and price pressures easing. Jerome Powell had stated that the timing of rate cuts would the “next question.”
As interest rates decline in 2024, the housing market will likely open up and banks will have more opportunities for new loans and refinancing.
While house prices have continued to increase in 2023, there was very little activity due to tightened inventory as home owners already locked into low fixed rates did not want to move and take a high interest rate mortgage.
Bond yields are heading into 2024 at yearly lows while the equity markets have surged as analysts project aggressive cuts early on in the new year.