--- title: The Price is Wrong description: This is no time to get complacent, and while interest rates may not move too high in the near future, they may also not improve much from here, as evidenced by what happened this week. 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Let us break down what happened and get into what to look for in the week ahead. Last Wednesday, the financial markets were prepared for a high Consumer Price Index (CPI) inflation reading. Well, the report showed headline consumer prices climbed 4.2% year-over-year, far above the 3.6% expected and the Core CPI (which strips out food and energy) rose by 3.0% year-over-year, the largest 12-month increase in 26 years. The market reaction was a swift decline in both stock and bond prices with yields moving higher. If inflation rises, rates/yields must rise to compensate the investor for the effects of inflation. Some bad history was made with this spike in inflation. For the first time in nearly 50 years, CPI has exceeded mortgage rates on a year-over-year basis. This screams opportunity for those looking to refinance or purchase a home because at some point either inflation must come back down, rates must go up, or some combination of both. Will Price Increases Be “Transitory?” That is the biggest question for the economy and financial markets. The Federal Reserve fully believes that the spike in prices will be temporary, and we should see a moderation in prices come fall. So we will have to wait to see if the Fed is correct. What we can expect over the summer months is more volatility in stocks, bonds, and rates, as future inflation readings will be closely watched for sustained and substantial price increases. “Don’t Fight the Fed” We should all remember that saying. The Fed continues to hold the Fed Funds Rate near zero and purchase bonds to keep long-term rates low. The muted outlook for inflation supports their stance. If the Fed is right and inflation does moderate in the fall, we will not see any major increase in rates. If the Fed is wrong and we see sustained higher inflation, the Fed will likely adopt other tools to help keep long-term rates low. Again, likely no major increase in rates. If that sounds a bit like a win-win from a rate perspective, yes, it is. We should expect rates to remain relatively low for a longer timeframe. Bottom line: This is no time to get complacent, and while interest rates may not move too high in the near future, they may also not improve much from here, as evidenced by what happened last week. Take advantage of what is available today thanks to the Fed bond purchasing program. ## Related Articles [![](https://info.carringtonmortgage.com/hubfs/IMAGES/Market%20Trends/Market%20Trends_2021.05.24.jpg)](https://info.carringtonmortgage.com/knowledge-base/what-goes-up-must-come-down) [Market Trends](https://info.carringtonmortgage.com/knowledge-base/tag/market-trends) ### [What Goes Up Must Come Down](https://info.carringtonmortgage.com/knowledge-base/what-goes-up-must-come-down) Last Week in Review: What Goes Up Must Come Down [Jordan](https://info.carringtonmortgage.com/knowledge-base/author/jordan) [Read More](https://info.carringtonmortgage.com/knowledge-base/what-goes-up-must-come-down) [![](https://info.carringtonmortgage.com/hubfs/IMAGES/Market%20Trends/Market_Trends_2020-01-27.jpg)](https://info.carringtonmortgage.com/knowledge-base/uncertainty-helps-rates) [Market Trends](https://info.carringtonmortgage.com/knowledge-base/tag/market-trends) ### [Uncertainty Helps Rates](https://info.carringtonmortgage.com/knowledge-base/uncertainty-helps-rates) **Last Week in Review:**Uncertainty Helps Rates [Jordan](https://info.carringtonmortgage.com/knowledge-base/author/jordan) [Read More](https://info.carringtonmortgage.com/knowledge-base/uncertainty-helps-rates) ## 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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