With both key fixed-rate mortgage indices holding firm this week, time may be finally running out on the long-running interest decline of 2009.
Why would lower rates be on the clock? Inflation — finally — may be awakening from a long slumber, and waking up higher mortgage rates with it.
The evidence is in data provided by the National Inflation Association, which claims that it’s not deflation that threatens the U.S. economy but inflation.
"While most mainstream economists such as Nouriel Roubini are warning of deflationary threats to the U.S. economy, it is our belief that massive price inflation has already begun,” the NIA said in a statement last week.
Now, we have to be careful about the NIA — its tag line describes the organization as one that is “dedicated to preparing Americans for hyperinflation.” So higher inflation could well be described as a self-fulfilling prophecy for the group. But the NIA makes one interesting point: The price of agriculture commodities — specifically corn, sugar and wheat — are poised for increased global growth, as demand rises for such commodities.
With price increases in key agricultural economies looming, Federal Reserve officials won’t stand idly by — they’ll have to raise rates to keep rising inflation at bay, especially if the U.S. dollar continues to falter, making the price Americans pay for goods rise at a time when consumers can least afford it. That, in turn, could make U.S. farmers turn to healthier economic bourses like China and Japan.