Fed Battling Inflation While Housing Market Struggles With Affordability Crisis
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The Fed is not targeting housing prices or affordability in its policy decisions, instead prioritizing maximum employment and stable inflation.
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High interest rates, driven by the Fed's inflation fight, are exacerbating housing affordability issues.
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Jerome Powell acknowledges the housing market is in a "very challenging situation" but sees limited Fed policy tools to address it directly.
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The Fed cut rates early in the pandemic which stimulated housing demand, and is now raising rates which will slow the housing market.
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There are longer-standing issues in housing supply that the Fed does not have tools to resolve; more construction is needed to meet demand.