The hikes have all been part of an attempt to ease soaring inflation in the U.S., which has become a top issue for Americans. The Bureau of Labor Statistics (BLS) published inflation figures for November on Tuesday showing that the year-over-year inflation rate had dropped down from 7.7 percent in October to 7.1 percent last month, a welcome decrease for the Biden administration that has faced heat over the elevated prices.

Concerns about inflation in recent months have been accompanied by fears of a potential housing market crash as recent years brought soaring mortgage rates and elevated housing prices. While the Federal Reserve does not set mortgage rates, its decisions have the potential to indirectly affect them.

Federal Reserve Chair Jerome Powell himself noted in an opening statement at a press conference on Wednesday that the central banking systems policies have resulted in tightened financial conditions, and that effects on demand were being seen “in the most interest-sensitive sectors of the economy, such as housing.”

The mortgage industry’s key players monitor the Federal Reserve, and the mortgage market’s response to the Federal Reserve’s actions can impact mortgage rates. Bill Adams, chief economist for the financial services company Comerica Bank, told Newsweek that even before the Federal Reserve eased its rate hikes on Tuesday with the .50 percent increase, financial markets “already priced in expectations for the Fed to finish raising rates early next year and then begin to reduce rates later in 2023.”

“And that’s part of why mortgage rates are down a little bit from their peak earlier in 2022,” Adams said.

Mortgage rates have inched down 1.125 percent from the October 2022 peak of 7.375 percent, The Basis Point reported Tuesday. Tuesday’s improved inflation report “opens a path for the Fed to stop raising rates early 2023, but it’s still way too early for the Fed to be thinking about reducing interest rates,” Adams said.

“This better CPI [Consumer Price Index] report is helping to stop the surge in mortgage interest rates, but it’s not enough for rates to be coming down yet,” he added.

JR Gondeck, partner and managing director with the financial advisory firm Lerner Group, noted in a recent NextAdvisor report that mortgage rates had gone down despite the Federal Reserve’s rate hikes. Gondeck said that the lower mortgage rates were expected to continue to be seen moving into 2023 in spite of potential future rate hikes.

The Federal Reserve is expected to approve some additional smaller hikes moving forward—Comerica has projected that they will raise rates by a quarter percent at the following two meetings. In the meantime, financial markets may continue to anticipate and respond to these potential eased rate hikes.

Lower interest rates, whenever they do come, could be crucial in providing meaningful relief for the housing market, Nerdwallet reported. And interest rates are likely to remain elevated until the Federal Reserve believes that inflation is slowing.

“We’re past peak inflation,” Jeffrey Roach, chief economist for LPL Financial, told Newsweek. “We think that 2023 is going to be even more encouraging for investors, and for households to see that inflation is indeed finally slowing down.”

As for the housing market, Roach believes that “we still have some more slowdown to go.”

“We think there’s more to go downside in terms of housing,” Roach continued. “And we think that even though we do see more downside in the near future, we don’t think the housing market is going to play out like it did in the great financial crisis.”

Update 12/14/22, 5:40 p.m. ET: This article was updated with additional information.