Weekly Mortgage Rates Edge Down as the Fed Waits for Decisive Drop

This article was first published on NerdWallet.com.

Average mortgage interest rates were slightly lower this week as inflation data met market expectations, but hopes for a rate cut from the Federal Reserve remained dim. Mortgage rates may end up treading water until economic trends are decisive enough for Fed action to be inevitable.

The average rate on the 30-year fixed-rate mortgage fell to 6.98% in the week ending May 16, according to rates provided to NerdWallet by Zillow. It was a decrease of five basis points from the previous week. (A basis point is one one-hundredth of a percentage point.)

Inflation may be moderating

On May 15, the Bureau of Labor Statistics released the latest consumer price index, which is a key measure of the rate of inflation. The CPI creates a virtual "market basket" of consumer goods and services, covering categories like gas, apparel and dining out. By measuring how these prices change over time, the CPI serves as a useful gauge of the rate of inflation.

The most recent CPI, which covered April, showed a 3.4% year-over-year increase in prices. That doesn't sound great, but it's a decrease from March, when it was 3.5%.

This step in the right direction still leaves the rate of inflation well over...