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Mortgage rates are not being supported by the March economic calendar. It’s hard to see the reason for rates falling. Mortgage rates have been rising rapidly in February and are likely to fall or increase slightly.

The outlook for mortgage rates will be dominated by three dates on the economic calendar:

• The February jobs report will be available on March 10. The Federal Reserve and the mortgage market will be paying attention to hourly wages as well as the number of new jobs.

• 
  The February Consumer Price Index will be released on March 14. It is unlikely that it will reflect a significant slowdown in inflation, so it won’t give mortgage rates any room to fall.
  

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  March 22 is the due date for the Fed’s next monetary announcement. The Fed is expected to increase short-term interest rates. But the real question is how aggressively.
  

The February jobs report could be the starting point for the rest. The good news for job prospects could be a mixed bag for mortgage rates. After the last monetary policy meeting, Fed Chair Jerome Powell spoke out. He stated that recent job gains have been strong and that the labor market is still out of balance. He stated that there were 1.9 jobs available for every person who was looking for work. This explained why he believes the labor market is unbalanced.

Powell suggested that the Fed would like to reduce the number of job opportunities for job seekers. This means that it wants less jobs in the economy. As part of its inflation-reduction strategy, this would result in a slowdown for wage increases.

The CPI has not seen a decline in year-over-year inflation as the Fed desired. The “nowcast” inflation indicator from the Cleveland Fed shows that it was at over 6% in February. This is far too hot to be comfortable with for the Fed.

For the past year, the Fed’s monetary committee has been increasing short-term interest rates. It doesn’t appear ready to hit pause. The question now is whether the Fed will increase the federal funds rate by one quarter of a percent point or one-half. A possibility of a half point increase could be enough to keep mortgage rates from falling before the Fed meeting.

If this forecast proves wrong, then mortgage rates could fall before the Fed meets. This would be due to a sudden decline in job creation, slowdowns in wage increases, or an unexpected respite from inflation.

We forecast that mortgage rates would decline in February, as the Federal Reserve prepares the next chapter of its inflation-busting campaign. Rates were wrong. The 30-year fixed rate mortgage increased more than 1 percentage point in three weeks from a 6.002% annual interest rate on February 2 to 7.012% on February 22.

Rates rose because there are more jobs and the workers are being paid more. Inflation drives mortgage rates up because of the worker-friendly economy. The Fed then raises short-term rates in an effort to slow down inflation.

Mortgage rates began rising in February after the Bureau of Labor Statistics reported January’s net 517,000 job growth and an average hourly earning increase of 4.4% in the past 12 months.

While you might be happy for your neighbors getting raises and jobs, the news is troubling to bond markets where mortgage rates are ultimately set. When companies create jobs and increase wages, the markets worry about inflation.

The worries turned out to be justified. The Bureau of Labor Statistics reported that prices had risen 6.4% over the twelve months ended January. This is significantly higher than the Fed’s inflation goal of 2.2%. Forecasters predicted that the central bank would raise short-term interest rates to respond.