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Fed rate hikes seek to stabilize housing market along with inflation

Yahoo Finance Live anchors look at the state of the housing market and inflation amid the Fed's interest rate hike cycle.

Video Transcript

[AUDIO LOGO]

DAVID BRIGGS: No wiggle room there for Jerome Powell, Seana. And you brought up this earlier, he's very clear, data dependent, they'll take it one meeting at a time. But it sure sounds like-- and I'm curious if Andrew Levin's happy with what he heard from Powell-- a 75 point hike might be coming again at the next meeting, our fourth straight.

SEANA SMITH: Yeah, it does certainly sound like that is still on the table here. And it echoes what we've heard from our guests since we got the decision, the fact that we are so far from getting inflation under control that we need a more aggressive Fed because, clearly, when you take a look at the job market today, what we're seeing play out in the economy, yes, housing is starting to weaken, but we heard from Powell himself that we need to see a larger correction here just in order to get housing to the levels that we need to see to slow the economy and then, of course, bring inflation under control.

So I think a more aggressive Fed in the coming months is something that the market is now anticipating. I don't think they were necessarily expecting that going into the decision today, and that's why we saw the reaction that we did in the markets shortly after that decision was announced and we did get those projections. Now, we have been going-- kind of searching for direction in the past hour or so with, now, all three of the major averages in the red as we head into the final 30 minutes of trading.

But, Rachelle, Wall Street now, I guess, really just trying to figure out, when we take a look at how aggressive the Fed is and the hawkish stance that Powell had reiterated time and time again during the press conference, just what exactly that means here in the coming months and exactly how painful that's going to be for the economy.

RACHELLE AKUFFO: And we did hear Powell say, look, there could be between 100 and 125 basis points more to go before the end of the year and that the FOMC is split on that. So I do think that's interesting. Obviously, being asked about frontloading, they seem to obviously be rather frontloading than doing too little, too late. And the Fed is sticking to their guns.

They were consistent throughout saying, look, inflation, if it doesn't come down, everything else is coming secondary. They're not really looking at the equity markets. They're still focusing on unemployment and that 2% target. So we just have to keep our fingers crossed. But I don't think equity markets are going to be too happy with that for a while.

DAVID BRIGGS: Nope. When you look at those numbers at the bottom of your screen, they continue to go down, continue to decline, it looks like, deeper into the red. And just one more thing. On the housing-- because he did say that was the one obvious example that they are having success. But, again, we talk a lot about negative data coming in on housing across the country, but we're still talking about price increases cooling.

We're not talking about price drops, net price drops. They're still above where they were a year ago. We're a long way in terms of housing from what Jerome Powell wants to see. And that's without even talking about rent. That is very sticky and doesn't appear to be improving because supply is not improving fast enough.