For the housing industry, it could mean marginal relief for homebuyers as the Fed will be less inclined to raise rates. “Still, a cooler labor market that takes some pressure off borrowing costs would be a better backdrop for buyers than another leg higher in mortgage rates.” The CME Group‘s FedWatch tool on Tuesday showed a 50/50 split among interest rate traders that a Fed rate increase is coming in September. But the alternative scenario would support a higher federal funds rate, she indicated. “With five years of above-target inflation, the risk grows that higher inflation may become entrenched in price- and wage-setting behavior, leading to persistence that would be much harder for us to attack.