Overview: With little major news, mortgage markets were relatively quiet ahead of Wednesday’s Federal Reserve meeting. The Fed’s comments were viewed as mildly negative for mortgage rates, and rates ended the week slightly higher.

As expected, the Fed raised the federal funds rate by 25 basis points. The statement released after the conclusion of the meeting was more hawkish than expected, meaning in favor of tighter monetary policy. According to the statement, officials project that further gradual rate hikes will be needed due to “sustained expansion of economic activity, strong labor market conditions,” and inflation, which is near the Fed’s target level. Both Fed officials and investors are nearly evenly split on whether there will be one or two more rate increases this year.

One reason that the Fed has been raising the federal funds rate is that inflation has been increasing in recent months. After holding steady at an annual rate of increase of 1.7% or 1.8% for about a year, Tuesday’s release of the Consumer Price Index (CPI) showed that core inflation in May was 2.2% higher than a year ago. This was the third straight month that the annual rate of increase was above 2.0%. Week Ahead

Looking ahead, there will be a European Central Bank (ECB) meeting on Thursday. While no policy changes are expected, investors will be looking for guidance about the timing of future actions. This will be followed by a Bank of Japan meeting on Friday. For major U.S. economic data, the Retail Sales report will be released on Thursday. The New Residential Construction report (also known as Housing Starts) will come out on June 19, and the Existing Home Sales report will be released on June 20.