--- title: Rates Spike on Tough Fed Talk description: The tough Fed talk hurt long-term rates like mortgages, last week. It remains to be seen if the Fed can act as tough as they talk. If you, a family member, or a friend is considering a mortgage, now is a great time as rates remain below the rate of inflation … something that hasn’t happened in nearly 50 years. image: https://info.carringtonmortgage.com/hubfs/Market%20Trend_2022.03.24.jpeg --- [Skip to content](https://info.carringtonmortgage.com/knowledge-base/rates-spike-on-tough-fed-talk#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’s walk through what happened last week and talk about the big reports this week. **“There is an obvious need to move expeditiously to a more neutral level and more restrictive levels if needed to restore price stability,” Fed Chair Jerome Powell – 3.21.22.** This quote, along with several others from Mr. Powell sent the bond prices lower and rates touching three-year highs. It suggested the Fed will need to hike the Fed Funds Rate quickly to get to a more neutral rate, where the Fed Funds Rate neither hurts nor helps the economy. Presently, the Fed Funds Rate is between .25% – .50%. What would be a neutral rate? Atlanta Fed President Bostic, who was also speaking this week, said the neutral rate is 2.40%. So, this means the Fed wants to hike the Fed Funds Rate by 2.00% or 8 more .25% hikes to get to Bostic’s neutral rate. Mr. Powell also said they could move to more “restrictive levels,” which would mean even more rate hikes and a Fed Funds Rate higher than 2.40%. **“Risk is rising. An extended period of high inflation could push longer-term expectations uncomfortably higher.” Jerome Powell.** This quote speaks as to why long-term rates have risen so fast of late and why the Fed is speaking so tough this week. The major fear of the Fed is for long-term inflation expectations to rise – meaning, people will expect higher prices in the future. If people expect higher prices, we will see higher prices. This disruption to price stability is exactly what the Fed wants to fight. **Housing Already Seeing the Effect of Higher Rates** New Home Sales for February showed sales of newly built homes decline from a downwardly revised January number. Overall, New Home Sales are down 6.2% from February 2021. NAHB Chief Economist Robert Dietz said, “New home sales softened in January and February as mortgage rates increased.” A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home doesn’t have to be built or even started to be considered a new home sale. Of the 407,000 new homes available for sale only 35,000 are built and ready to be occupied. The median home price of a new home rose to $400,600, up 10.6% from February 2021, despite a sharp 20% increase in building materials over that time. It’s clear that housing has cooled a bit, which is exactly what the Fed wanted. What remains unclear is if, when, and how much the Fed could hike rates as an interest rate sensitive sector, like housing, has already slowed down. **Bottom line**: *The tough Fed talk hurt long-term rates like mortgages, last week. It remains to be seen if the Fed can act as tough as they talk. If you, a family member, or a friend is considering a mortgage, now is a great time as rates remain below the rate of inflation … something that hasn’t happened in nearly 50 years.* ## Related Articles [![](https://info.carringtonmortgage.com/hubfs/Market-Trends-2022-03-21.jpeg)](https://info.carringtonmortgage.com/knowledge-base/we-have-liftoff) [Market Trends](https://info.carringtonmortgage.com/knowledge-base/tag/market-trends) ### [We Have Liftoff](https://info.carringtonmortgage.com/knowledge-base/we-have-liftoff) [CMS Marketing](https://info.carringtonmortgage.com/knowledge-base/author/cms-marketing) [Read More](https://info.carringtonmortgage.com/knowledge-base/we-have-liftoff) [![](http://www.carringtonwholesale.com/wp-content/blogs.dir/2/2019/10/Market_Trends_19.10.07-300x180.jpg)](https://info.carringtonmortgage.com/knowledge-base/recession-fears-renewed) [Market Trends](https://info.carringtonmortgage.com/knowledge-base/tag/market-trends) ### [Recession Fears Renewed](https://info.carringtonmortgage.com/knowledge-base/recession-fears-renewed) **Last Week in Review:** Slowing but Growing [Jordan](https://info.carringtonmortgage.com/knowledge-base/author/jordan) [Read More](https://info.carringtonmortgage.com/knowledge-base/recession-fears-renewed) ## Mortgage & Lending Services - [Buy a Home](https://www.carringtonmortgage.com/home-loans/buy-a-home) - [Refinance a Home](https://www.carringtonmortgage.com/home-loans/refinance-a-home) - [Mortgage Calculators](https://www.carringtonmortgage.com/tools/calculators) - [The Loan Process](https://www.carringtonmortgage.com/tools/loan-process) - [Find an Expert](https://www.carringtonmortgage.com/find-an-expert) - [Home Builders](https://www.carringtonmortgage.com/Partner-with-Us/home-builders) - [Real Estate Agents](https://www.carringtonmortgage.com/Partner-with-Us/real-estate-agents) ## Terms - [Privacy Policy](https://www.carringtonmortgage.com/legal/privacy-policy) - [California Consumer Privacy Act Notice](https://www.carringtonmortgage.com/legal/ccpa-notice) - [State Licensing](https://www.carringtonmortgage.com/legal/state-licensing) - [Terms and Conditions](https://www.carringtonmortgage.com/legal/terms-conditions) - [Best Practices](https://www.carringtonmortgage.com/legal/best-practices) - [Fair Lending Statement / HMDA Notice](https://www.carringtonmortgage.com/legal/fair-lending-statement) - [Consumer Fraud Alert](https://www.carringtonmortgage.com/legal/consumer-fraud-alert) - [Equal Opportunities](https://www.carringtonmortgage.com/legal/Equal-opportunities) ## Manage Your Mortgage - [Payment Options](https://www.carringtonmortgage.com/payment-options) - [Mortgage Assistance](https://www.carringtonmortgage.com/mortgage-assistance) - [Disaster Assistance](https://www.carringtonmortgage.com/disaster-assistance) - [Scheduling Servicing Fee](https://www.carringtonmortgage.com/schedule-of-fees) - [Payoff Statements](https://www.carringtonmortgage.com/payoff-statements) ## Contact Us - Current Customers ## About Us - [Our Mission](https://www.carringtonmortgage.com/our-mission) - [Foundation](https://www.carringtoncf.org) - [Holding Company](https://www.carringtonhc.com) - [Accessibility](https://www.carringtonmortgage.com/accessibility) - [Press and Media](https://www.carringtonmortgage.com/pressandmedia) - [Contact us](https://www.carringtonmortgage.com/contact-us) ## Get the App [![](https://info.carringtonmortgage.com/hs-fs/hubfs/raw_assets/public/Templates/2022/svg/Carrington-mobile-apple.jpg?width=135&height=42&name=Carrington-mobile-apple.jpg)](https://apps.apple.com/us/app/carrington-mobile/id1673471360) [![](https://info.carringtonmortgage.com/hs-fs/hubfs/raw_assets/public/Templates/2022/svg/White-Google-1.jpg?width=135&height=42&name=White-Google-1.jpg)](https://play.google.com/store/apps/details?id=com.carringtonms.CMSMobile2&pli=1) [Icon-Facebook](https://www.facebook.com/CarringtonHomeLoans/) [Icon-Twitter](https://twitter.com/CarringtonMS) [Icon-Linkedin](https://www.linkedin.com/company/carrington-mortgage-services-llc) [Icon-Instagram](https://www.instagram.com/carringtonmortgage/) Icon-EHO Consumer Access NMLS ID #2600 | Copyright 2026 Carrington Mortgage Services, LLC. 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