Fed Signals Another Rate Increase Could Come This Year

Mortgage rates recently climbed above 7%, reaching their highest level in three years during a worldwide bond-market selloff. Buyers and homeowners seeking new financing now face that tougher lending climate as Federal Reserve officials indicate monetary policy could become tighter again before the year ends.

During its September session, the Federal Open Market Committee voted 12-0 to lift its overnight rate target to 3.75% to 4%. Fed Chair Kevin Warsh took part in the unanimous decision. The adjustment was the central bank’s first upward move in over three years. Policymakers acted because they viewed inflation as a renewed risk to the economy.

Minutes published Wednesday show that most officials considered one additional increase appropriate this year. Their position conflicts with President Donald Trump’s repeated preference for reductions, which can encourage economic activity and lower federal borrowing expenses. For households, the Fed’s outlook adds another consideration to financing decisions already being made with mortgage rates beyond 7%.