The Cleveland Fed model shows that rent inflation will not subside until 2026, which is expected to exacerbate the difficulty of interest rate cuts

Federal Reserve Chairman Jerome Powell stated last week that central bank officials are closely monitoring the "not fully normalized" inflation in housing prices. However, they may have to wait more than a year. According to research from the Cleveland Federal Reserve Bank, it may not be until mid-2026 that rental inflation in the Consumer Price Index returns to pre-pandemic normal levels. Researchers noted that while several indicators suggest new rents are declining, the number of people moving and signing new leases has decreased, so the sample in the CPI does not reflect the full picture