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Patience Required for the Second Half of 2024

Hello everyone. Welcome back to the Mortgage Rundown. Today we are going to talk about what's happening with interest rates.

2024 is nearly halfway through and we've seen a lot of interest rate changes. We went from expecting three-to-five interest rate cuts by the Federal Reserve, to hoping that there will be one or two. Inflation has been a real challenge for the Fed and it appears the economy is doing well as inflation comes down slowly.

Just to recap where we are today, the graph on your screen shows what inflation has done for the past 12 years. As you can see, it is gradually moving lower. It will likely be more than a couple of months before it nears the Fed's target of 2%.

With that being the case, we should only expect the Fed to move once or twice before the end of the year. Most believe the first move won't be until November.

Turning over to interest rates, it's been a very bumpy ride for the past five years. If you look at the chart on your screen you can see how much higher rates have moved over the past couple of years compared to how they dropped during COVID. In my opinion, Fed policy is very restrictive but, unfortunately, with inflation, it's very sticky and it's going to be a bit of a waiting game until we see them budge.

All that being said, we do have to keep an eye on the jobs report on July 5^th. With inflation data having somewhat leveled off, it's important to keep an eye on the broader economy and specifically the unemployment rate as we move ahead to the second half of 2024.

That's it everyone from the capital markets desk this week. Thank you all for watching and have a great day.

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