US Economy in Focus: Higher Rates Loom Despite Slowing Inflation
The latest economic data and news from America's central bank have painted a mixed picture. Despite some signs of inflation cooling, many Federal Reserve officials still believe that higher interest rates will be necessary if prices continue to rise.
According to minutes of the Fed's July meeting, several officials think that the key short-term rate should be increased in the coming months. However, they do not provide specifics on how many policymakers support this view. The Fed voted 9-3 to keep the current rate at around 3.6%.
In related news, mortgage rates have eased for the second week in a row but remain elevated compared to last year. The average long-term US mortgage rate fell to 6.65%, while borrowing costs on 15-year fixed-rate mortgages dropped to 5.95%. Despite this pullback, rates have been mostly rising this year, limiting homebuyers' purchasing power.
On a more positive note, unemployment claims declined last week, indicating that layoffs remain low and most Americans enjoy job security. Jobless claims dropped to 206,000 from a revised 212,000 the previous week.