If anyone is still holding out hope that the Federal Reserve will reduce interest rates anytime soon, that hope should have suffered a blow today as the government announced that producer prices rose 4% over the past year, exceeding expectations. That was so-called "total producer prices."  Meanwhile, the "core rate of producer inflation" rose by 0.1%, matching expectations. Today's surprising rise in overall producer inflation could keep rate watchers on edge while waiting for tomorrow's more significant release on consumer inflation. Consumer inflation has been trending downward in recent months, but the question is will it be low enough by the time of the Fed's next meeting to convince them that lowering rates will not ignite a price rise binge. Watch for tomorrow's release to get a hint at where the Fed is headed. But only a hint.

Of course, mortgage interest rates do not automatically track the Fed rate of interest. Mortgage rates more closely track the 10-year U.S. Treasury note rates.  But, it's all connected....

Moreover, the rates can be affected by overall economic outlook. Lately, that's been pessimistic. For more on the pessimism, check out the Wall Street Journal piece "Business Mood May Give the Fed Leeway to Cut."  I'd emphasize the may in that title. The Fed always errs on the conservative side when it comes to inflation. "Mood" is not something that Ben Bernanke and his compatriots care much about.

What I'm getting at is this:  If you need a home, don't wait for interest rates to fall.

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