Another Fed Rate Hike May Be Coming as Mortgage Rates Top 7% and Florida Gas Hits $4.08

Another Federal Reserve rate increase may be coming before the end of the year, and Floridians already paying more than 7% for a mortgage and $4.08 a gallon for gas could feel it. Fed Chair Kevin Warsh declined on Friday to say what the central bank will do at its Oct. 27-28 meeting, but minutes of the Fed's September meeting show most officials believe one more hike will likely be needed this year.

The Fed raised its benchmark rate by a quarter point in September to a range of 3.75% to 4%, its first increase in three years, as inflation pushed higher on rising fuel prices.

What Warsh said

Speaking Friday in Bangkok during a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva at a meeting of financial leaders, Warsh offered no new signal on the next move. "I don't prejudge meetings," he said, according to The Associated Press.

Warsh said the Fed would deliver price stability and noted it had removed a dose of accommodation about a month ago, a reference to the September hike. He said the boom in artificial intelligence investment is one factor behind higher inflation but predicted AI would ultimately bring a huge benefit to the world economy. He also suggested AI tools could eventually help the Fed's own economists, who he said now rely on old-fashioned models, and the Fed's AI task force is scheduled to meet Nov. 16.

President Donald Trump, who appointed Warsh earlier this year, has repeatedly called for rate cuts and criticized the September decision, though he still supports Warsh, the AP reported.

What the Fed's minutes show

The Fed's policy statement on Sept. 16 said inflation remains elevated and that the increase would support a timelier return to the Fed's 2% goal. The decision was unanimous, 12-0.

Minutes of that meeting, released Oct. 7, said most participants assessed that another increase in the target range would likely be appropriate, while stressing that they approach each meeting with an open mind. Participants pointed to geopolitical developments that had pushed up prices for crude oil and refined fuels, and several said short-term inflation expectations were elevated. Fed staff described financing conditions as somewhat restrictive for mortgage borrowers, and a few officials said housing was a sector where financial conditions did not appear supportive.

Inflation data released since the meeting point in the same direction. The Labor Department reported Oct. 14 that consumer prices rose 3.7% over the 12 months ending in September, with a 0.6% jump in September alone. Gasoline prices were up 34.2% from a year earlier. Excluding food and energy, prices rose 2.6%.

What it means for Florida borrowers

The Fed's benchmark rate does not directly set mortgage rates, but it influences what banks charge across the economy. The average 30-year fixed mortgage rate stood at 7.40% in Freddie Mac's survey for the week of Oct. 15, unchanged from the week before and up from 7.03% on Sept. 24, when rates crossed 7% for the first time since January 2025. A year earlier the rate was about 6.3%.

On a $400,000 loan, the difference between 6.3% and 7.4% adds roughly $290 to the monthly principal-and-interest payment, based on standard amortization. Credit card rates, which are typically tied to the prime rate, tend to move up with Fed increases, and auto loans and home equity lines are also likely to cost more over time, the AP noted.

Florida's housing market

Florida Realtors' September report, released Oct. 16, shows a market that has slowed in sales even as prices hold steady and inventory shrinks from last year's highs.

The drop in new pending sales, a measure of contracts signed during the month, suggests fewer buyers committed as mortgage rates climbed above 7% in late September. Condos remain the weakest part of the market, with 7.7 months of supply compared with 4.4 for single-family homes. Many condo owners are also contending with higher association fees and special assessments tied to the state's post-Surfside building safety and reserve laws. Cash purchases made up more than half of September's condo sales, 3,765 of 7,179, and rose 5.1% from a year earlier while overall condo sales were flat, which leaves buyers who need a mortgage a smaller share of the market as rates climb.

Higher rates add to cost pressures Florida homeowners already face from property insurance. The Federal Reserve's most recent Beige Book survey of business conditions found Florida tourism cooling and more homes in the state selling below asking price.

Gas prices and the household budget

Energy is a big part of the inflation story the Fed is watching. Florida's average price for regular gasoline was $4.08 a gallon Monday, up a penny from a week earlier and up from $2.90 a year ago, according to AAA. The national average was $4.30. Monroe County and the Florida Keys had the highest average in the state at $4.39, and diesel in Florida was about $5.88 a gallon a week ago, compared with $3.57 a year earlier.

AAA said oil prices climbed back above $100 a barrel last week, which could push pump prices higher. For Floridians who drive long distances to work, the combination of costlier fuel and costlier borrowing squeezes household budgets from two directions.

What's next

The Fed's next policy meeting is Oct. 27-28, with a decision and Warsh news conference on the afternoon of Oct. 28. The final meeting of the year is Dec. 8-9, when officials will also release new economic projections. The Fed is in its quiet period before the October meeting, which limits public comments by officials.

Florida Realtors will release October housing figures on Nov. 16. Freddie Mac publishes its mortgage rate survey every Thursday, and the next consumer price report will show whether fuel-driven inflation is spreading into other prices, a key test for whether the Fed raises rates again in October or waits until December.