The debate now is when the Fed will start cutting interest rates. Stocks have been rallying in recent weeks as investors are betting a cut will come by May. That would certainly help the housing market, which has frozen with mortgage rates at the highest levels in about two decades. The Fed has to see how the data comes in this winter, but it would make sense to bring rates back to a lower level now that many pandemic problems are over. That doesn’t mean a return to near-zero. But, as New York Fed President John Williams said Thursday, rates are “the most restrictive in 25 years.” The Fed cannot declare the inflation fight won prematurely, but current rates might soon seem excessive.
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