Episode summary
Will Iran conflict make the Fed hawkish this week?
HousingWire Daily
· · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami said the Fed will almost certainly hold rates steady next week, and he argued that the Iran conflict makes a hawkish surprise more likely than a dovish one. In his view, the market has already priced out most rate cuts, while PCE inflation remains above target and jobless claims have not weakened enough to force the Fed’s hand. He framed the conflict as a potential supply shock that could lift energy and input costs, especially if it drags on or threatens shipping routes through the Strait of Hormuz.
Mohtashami also contrasted this moment with the COVID shock, saying the housing market is in much healthier shape now than it was in 2020. He said housing had been moving toward a normal, functioning balance before the conflict, with inventory rising and demand holding up better than doomsayers expected. His baseline forecast for 2026 remains intact unless rates break outside his range, but he warned that a move above 6.75% would be outside that forecast and could pressure sales.
He said the biggest surprise at the Fed might be that some doves sound more hawkish because inflation is still sticky and the geopolitical backdrop is uncertain.
Key takeaways
- Logan Mohtashami expects the Fed to keep rates unchanged next week, with no rate cuts regardless of weekend headlines.
- He said the Iran conflict could push the Fed more hawkish because it may raise energy and input costs while inflation is still above target.
- Mohtashami’s housing forecast still assumes mortgage rates mostly stay between 5.75% and 6.75%.
- He said if rates stay at 6.25% or below, existing home sales could increase by 237,000.
- He argued the market is already pricing out most 2026 cuts, so jobless claims would need to weaken materially to change the Fed’s stance.
Notable quotes
“the Federal Reserve will meet next week and there will be no rate cuts”
“you probably need jobless claims to really start breaking”
“the PCE inflation data is is still 1% above target out there”
“maybe one surprise could be maybe some of the doves have more of a hawkish tone”
“If rates stay 6 and a quarter and under, you could get 237,000 more existing home sales”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Motoshami to talk about the upcoming Fed meeting and what impact the Iran conflict might have on their rate stance. As always, I want to thank our sponsor Trust and Will for making this episode possible.
Logan, welcome back to the podcast on this very auspicious day. Sarah, it's Friday morning, so you know, we're going to do this and then uh we don't know what Monday morning is going to bring because who knows over the weekend with this uh conflict. But one thing we know for sure is that the Federal Reserve will meet next week and there will be no rate cuts.
So uh um you know that is for certain at this point regardless of what happens over the weekend. So no matter the fact that we got that really bad jobs report, that's not enough because they've already got rate cuts into the system for that.
There's enough rate cuts for them for the Hawks to be closer to neutral policy. And with this conflict still rising, um you really more now than ever, you probably need jobless claims to really start breaking. uh uh not not only for for them to feel comfortable about you know talking about rate cuts but also uh there there might be a lingering feeling that this situation while not in the same scale can be a problem going out.
you know, if a few pirates start shooting ships here, you know, stuff like that that, you know, the the whole Trinity impact or thing that we talked about on November of 2024 after Trump won is that he really does need lower energy prices and lower rates to make people. But this has gone on now. It's almost two weeks and uh it doesn't look like there's going to be any closure.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed rates
- iran conflict
- housing market outlook
- mortgage rates
- economic outlook
Watch the episode
Watch “Will Iran conflict make the Fed hawkish this week?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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