Lawler: Changes in Various Interest Rates Since the FOMC Cut Its Target Fed Funds Rate by 50 Basis Points
From housing economist Tom Lawler:
Below is a table showing changes in various interest rates from the day before the FOMC’s 50 basis point cut in its Fed Funds rate target and last Friday.
CR Notes: After the Fed rate cut, the longer-term rates increased (including mortgage rates). The yield curve has reverted as this graph from FRED shows (10 year minus 2 year).
CR: With inflation at 2%, the Fed Funds rate around 3% (the longer run rate), the 10-year at around 4%, would put 30-year mortgage rates in the high 5% to low 6% range. That is probably the new normal range until the next recession.
More from Tom Lawler:
For fun (actually, it was a bit of a pain), I’ve compiled some tables showing the history of the median of economic projections of FOMC meeting participants, which are released quarterly. For example, in December 2020 the median projection of the midpoint of the Federal Funds Rate for the end of 2023 was 0.1%. The actual was 5.375%.