With the US inflation rate currently stable at 2.4%, it's evident that the economy has a handle on this aspect. However, the trajectory of interest rates, poised to break market records, is

painting a different picture. On Thursday, August 17, the yield on 10-year Treasury bonds surged to its highest point since 2007, reaching 4.329%. This surpasses the previous peak in October 2022, which stood at 4.24%. This surge is taking a toll on American households, evident in the 7.09% rate on 30-year mortgages as reported by mortgage giant Freddie Mac. This rate, the highest since 2002, has more than doubled within the span of 18 months.

This upward surge was further accentuated by the release of the minutes from the recent meeting of the US Federal Reserve's Monetary Policy Committee on Wednesday. The minutes revealed that by the end of July, central bankers weren't ruling out the possibility of further hikes in the Fed's key interest rates. During the period between March 2022 and July 2023, the Fed's rates surged from zero to over 5.25%.

The minutes state that, "With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy." However, it was noted that "a number of participants" also emphasized the need for the committee to strike a balance between the potential risk of excessively tight policy and the costs associated with inadequate tightening. Photo by Rdsmith4, Wikimedia commons.