Vanguard forecasts one more Fed hike by year-end, with a target range of 4%–4.25%. Chief economist Joe Davis said short-term rates would likely need to rise well above 4%—certainly above 5%—before Vanguard would discuss significant pressure on earnings and economic activity.
The Fed raised its target range to 3.75%–4% on Sept. 16, its first hike since July 2023. Vanguard's Sept. 17 note said August inflation risks remained heightened at both consumer and producer levels; it framed another increase as a policy recalibration, not the start of sustained tightening, and said its forecast depends on inflation cooling in 2027.
The 10-year Treasury yield closed at 5.11% on Sept. 23, The Hill reported, and the average 30-year fixed mortgage rate was 7.12% last week, according to Reuters. Those longer-term rates are distinct from the short-term Fed rate Davis discussed. The article calculates that a $400,000, 30-year mortgage at 7.12% costs about $2,694 a month in principal and interest, about $228 more than at 6.26% a year earlier.
