WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said Tuesday that the central bank is unlikely to raise its key interest rate in response to signs of stubborn inflation and underscored his view that price increases would soon start to cool again.

When inflation is high, the government raises rates to deter borrowers from taking loans in an effort to reduce spending. The current price of goods might skyrocket by the time the borrower pays it back. This will reduce the lender's purchasing power. When the demand for credit is high, so are interest rates.

In fact, the average for Q4 2023 was 7.3%. Analysts with Fannie Mae and the Mortgage Bankers Association (MBA) both project that rates will fall going into 2024 and throughout next year. Fannie Mae economists expect rates to drop more quickly, falling below 6% by Q4 2024.