The Federal Reserve still likely needs to tame the roaring car market before the central bank can start going easy on its inflation fight, according to Pat Ryan, CEO and founder of CoPilot, a car-pricing app.
Higher interest rates have slammed the brakes on the once-booming U.S. housing market, with 30-year fixed-rate mortgages pegged near 7% this week, up from about 3.1% a year ago. “The used-car market is much stronger than I think people expected,” Ryan told MarketWatch. “Car prices for dealers are dropping, but that’s not true for consumers.”
“In real terms, prices have barely dropped, but sales are up,” Ryan said. “That’s what scares the Fed.” Still, Fed Chairman Jerome Powell on Wednesday described inflation as growing “more and more challenging” this year, with demand from consumers keeping prices high, despite an easing in some pandemic supply-chain issues fueling shortages, including at car manufacturers.