Eyes were on the US Federal Reserve this week as officials said that tightening monetary policy may happen sooner than expected. With respect to monetary policy over the medium run, participants generally agreed that labor market conditions and inflation had moved closer to the Committee’s longer-run objectives in recent months, and most anticipated that progress toward those goals would continue. Moreover, many participants noted that if convergence toward the Committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated.
In regards to economic data for the week, inflation rose .10% in July and 2% year over year. Inflation has stayed within Fed targets and the Fed continues to believe inflation will remain tame for the foreseeable future. Mortgage applications went up 1.40% for the week ended August 16th, while the 30 year mortgage rate dropped to 4.29% from 4.35%. The hope is the reduction in mortgage rates can drive home buying and refinancing in the coming months.