MacroPolicy Perspectives
MacroPolicy Perspectives LLC

Links from MPP

Links from MPP

Why lower housing inflation may also lock in low interest rates

Housing is one of the largest items in consumer budgets, and it is also therefore a lynchpin in measures of consumer inflation. Housing inflation has tended to be cyclical, strengthening toward the end of the business cycle. Perhaps not surprisingly the role of housing inflation has been somewhat different in the current cycle reflecting structural changes in demand for homeownership in the aftermath of the housing crash and Great Recession. Housing inflation has been a bedrock of recovery and stability for core inflation and now appears to be moderating after a multi-year boom in multi-family construction has finally brought supply in line with demand. If realized, continued moderation in rental inflation would be welcome news for consumers enjoying only moderate wage gains, but it would constrain the Fed’s ability to raise interest rates much further.

 

http://www.rutgersrealestate.com/blog-re/blue-skies-for-consumers-clouds-for-fed/

Coronado Julia
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