--- title: Inflation, Fed, and the Wall description: This is an amazing moment to take advantage of an interest rate environment that is being manipulated by the Fed bond-buying program. The Fed will continue to buy bonds and keep rates relatively low for quite a bit longer, but if inflation ticks up in the months ahead, we should expect rates to tick up too. image: https://www.carringtonwholesale.com/wp-content/blogs.dir/2/2021/06/Market-Trends_2021.06.14.jpg --- [Skip to content](https://info.carringtonmortgage.com/knowledge-base/inflation-fed-and-the-wall#main-content) ![bell icon](https://info.carringtonmortgage.com/hubfs/raw_assets/public/Templates/2022/svg/Alert-Notifications-Icon.svg) [![Carrington Mortgage Services](https://info.carringtonmortgage.com/hs-fs/hubfs/carrington_logo_final_2col_rgb.png?width=250&height=57&name=carrington_logo_final_2col_rgb.png)](https://www.carringtonmortgage.com) - [About Us](https://www.carringtonmortgage.com/our-mission) - [Careers](https://www.carringtonhc.com/careers) - [Investors](https://www.carringtonhc.com/investors) - [Contact Us](https://www.carringtonmortgage.com/contact-us) [Recent Transfer](https://www.carringtonmortgage.com/new-customers) [Customer Login](https://www.carringtonmortgage.com/login) MAKE HOME WORK Manage My Home arrow-down-anticon/submenu Manage My Mortgage arrow-down-anticon/submenu Learning Center MAKE HOME WORK Manage My Home arrow-down-anticon/submenu - I Am Ready to Start - [Buy a Home](https://www.carringtonmortgage.com/home-loans/buy-a-home/check-existing-customer) - [Refinance My Home](https://www.carringtonmortgage.com/home-loans/refinance-a-home/refinance-step) - What Loan Is Right For Me? 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Let us break it all down and talk about what it means for you and your clients. **Consumer Inflation and Looking Ahead** On Thursday, the May Consumer Price Index (CPI) showed that consumer inflation rose by 5.0% year-over-year, and after removing the effects of food and energy, the year-over-year rate of inflation was 3.8%. While the headline showed that 5.00% inflation might be alarming, the bond market’s reaction was a bit restrained. Normally, high inflation numbers would apply heavy selling pressure on bond prices, causing rates to rise. That did not happen. Why? The bond market is forward-looking. The financial markets were expecting a “hot” inflation reading and have sided with the Fed who continues to say higher inflation over the coming months will be “transitory,” or short-term, in nature. Future readings of CPI will be important to follow to see if the high inflation readings do cool down. If they do, rates will remain low and could continue to improve; the opposite is also true. **9.3M Reasons Why the Fed Won’t Taper** The Federal Reserve, our central bank, has a dual mandate: maintain price stability (manage inflation/deflation) and promote maximum employment. On the latter, the economy is coming up short on the job creation front. The last two jobs reports came in well beneath expectations, and a recent report shows there are 9.3M jobs available in the economy: a record-high figure. So, we have a lot of work to do to get to maximum employment. If that is the case, it is highly unlikely the Fed will taper their monthly bond purchases anytime soon. The Fed has said they need to see “substantial improvement” toward their dual mandate before tapering. What does that mean for you and your clients? It means that long-term rates are likely to remain lower for a longer time. Be sure to read the chart section below as we discuss the wall, which has limited rate improvement. *Bottom line: This is an amazing moment to take advantage of an interest rate environment that is being manipulated by the Fed bond-buying program. The Fed will continue to buy bonds and keep rates relatively low for quite a bit longer, but if inflation ticks up in the months ahead, we should expect rates to tick up too.* ## Related Articles [![](https://www.carringtonwholesale.com/wp-content/blogs.dir/2/2021/06/Market-Trends_2021.06.07.png)](https://info.carringtonmortgage.com/knowledge-base/real-rates-and-when-the-music-stops) [Market Trends](https://info.carringtonmortgage.com/knowledge-base/tag/market-trends) ### [Real Rates and When the Music Stops](https://info.carringtonmortgage.com/knowledge-base/real-rates-and-when-the-music-stops) [Jordan](https://info.carringtonmortgage.com/knowledge-base/author/jordan) [Read More](https://info.carringtonmortgage.com/knowledge-base/real-rates-and-when-the-music-stops) [![](https://info.carringtonmortgage.com/hubfs/IMAGES/Market%20Trends/Market%20Trends_2021.05.03.jpg)](https://info.carringtonmortgage.com/knowledge-base/policy-response-meets-market-response) [Market Trends](https://info.carringtonmortgage.com/knowledge-base/tag/market-trends) ### [Policy Response Meets Market Response](https://info.carringtonmortgage.com/knowledge-base/policy-response-meets-market-response) This past week from recent lows, home loan rates edged higher, and the 10-year yield ticked back up to 1.68%, off the lower rates seen recently. 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