With a holiday-shortened week and little major news, mortgage markets were quiet over the past week. Tuesday’s inflation data and comments from Fed officials were the primary market movers for the week, and they were slightly favorable for mortgage rates, which ended the week near the lowest levels of the year.

The core Personal Consumption Expenditures (PCE) Price Index in April was just 1.5% higher than a year ago, down from 1.8% two months ago. Core PCE excludes the volatile food and energy components, which provides a clearer indication of the underlying trend. For most of 2016, inflation appeared to be slowly moving higher, but it has reversed direction so far this year. The PCE Price Index is the inflation indicator favored by the Fed. The Fed’s stated target for inflation is 2.0%, so officials would have preferred not to have seen declines over the last two months.

Overall, Fed officials expect that inflation will gradually climb toward their target level over the medium term. In recent comments, Fed officials have cited temporary factors to explain the decline in inflation over the last couple of months. In addition, some members of the Fed feel that tightness in the labor market will lead to an increase in wage inflation. Still, some prominent Fed officials have begun to question whether inflation will resume its upward path. On Tuesday, the Fed’s Lael Brainard said that she might reassess her outlook for the appropriate path for monetary policy if “the soft inflation data persist.” Mortgage rates improved a little after her comments. Week Ahead

Looking ahead, the important monthly Employment Report will be released on Friday. As usual, this data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the Institute for Supply Management (ISM) Manufacturing Index will be released on Thursday. The ISM Services Index will come out on June 5. The next European Central Bank (ECB) meeting will take place on June 8.