- Charles Plosser, outgoing Philadelphia Fed president
Applications for American home mortgages declined last week as interest rate climbed, according to the Mortgage Bankers Association. The seasonally adjusted index of mortgage application activity, which includes refinancing and home purchase demand, dropped 0.9% in the week ended November 7. The MBA's index of refinancing applications declined 1.9%, while the reading of loan requests for home purchases, a leading indicator of home sales, increased 1.1%.
Meanwhile, Federal Reserve Bank of Philadelphia President Charles Plosser said that the Fed should hike short-term interest rates "sooner rather than later", welcoming at the same the central bank's recent decision to move towards ending its easy-money policy stance. Plosser argued that waiting until the Fed fully meets its goal for maximum employment or reaching inflation target of 2% to start raising interest rates may be risky as it could put the bank's monetary policy behind the curve. Thus, interest rates should be raised from the current ultra-low levels, as it would allow to do so in a more gradual manner as fundamentals strengthen, "rather than face the prospect of a more abrupt increase in rates to catch up with market forces, which could be the outcome of a prolonged delay in our willingness to act," Plosser said.
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