The US Federal Reserve could cut rates three or four times this year if inflation data cooperates, with a first cut possible before July, a senior bank official said Thursday.

Financial markets are still concerned about inflation. The Fed influences short-term interest rates, which are falling, but longer-term bonds like the 10-year Treasury are a better reflection of inflation expectations.

Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

Fears of elevated interest rates dampened the mood on Wall Street at the start of this year–but cooling core inflation and dovish comments by Federal Reserve governor Christopher Waller have given investors reason to feel a bit more cheerful this week.

But minutes from their December meeting suggest that the decision was a close call — and that there is no guarantee policymakers will lower rates again anytime soon. The minutes of the central bank’s Dec.

As mentioned, mortgage rates haven't fallen in line with the Fed's rate cuts because they depend on factors beyond the agency's benchmark rate, such as the economy and 10-year Treasury bond yields. For example, when the 10-year treasury rate goes up, mortgage rates tend to follow, and vice-versa.