Why CPI Should Be Called The 'Can't Predict Interest' Report

CPI dropped. Mortgage lenders yawned.

Today’s CPI (Consumer Price Index) report landed with all the drama the financial press could muster. The headline number showed prices up 2.7% compared to last year. Core inflation—which strips out food and energy, and is what the Fed actually pays most attention to—rose 0.3% for the month and 3.1% year-over-year, a bit hotter than June and slightly above what was expected (The Guardian, New York Times).

And mortgage rates barely budged. The average 30-year fixed rate moved up by just 13 basis points to 6.57%, while the 15-year ticked down by two basis points (Yahoo Finance).

Why? Because even though the CPI is a buzzy number, it’s not the real driver of mortgage rates. Most of what moves rates happens in the bond market, where traders care more about future Fed moves and long-term trends. By the time CPI hits the headlines, the market’s already priced in most of what matters. Unless there’s a true shock, mortgage rates go about their business, ignoring the noise.

So if you woke up today thinking, “Maybe this CPI release is my chance to lock in a better rate,” the reality is, the CPI is the “Can’t Predict Interest” report for a reason. Focus on the actual movers: bond yields, Fed meetings, and major economic surprises. The CPI? Watch for the headlines, but don’t expect your mortgage rate to care.

#CantPredictInterest #CPIreport #mortgagerates