WASHINGTON, D.C. — The Federal Reserve indicated Wednesday that it might consider raising interest rates later this year. This indication coincided with a decrease in U.S. mortgage rates recently.

The average 30-year fixed mortgage rate fell to 6.47% this week, down from 6.52% last week, according to Freddie Mac. Market concerns about interest rate increases returned on Wednesday.

The Fed linked a potential rate increase to recent inflation connected to geopolitical conflicts. Annual inflation reached a three-year high in May, according to reports from the Bureau of Labor Statistics. Additionally, recent employment data exceeded expectations.

Yields on 10-year Treasury bonds increased after the release of inflation and employment data. Bond yields typically increase when bond prices decrease.

Pending home sales in May increased 3.8% compared to the previous month. Compared to the same month last year, pending home sales in May saw a 4.8% increase, according to the National Association of Realtors. Lawrence Yun, Chief Economist for the association, stated, "The late-spring surge in buyers, even with mortgage rates unchanged, is an indication of pent-up housing demand and consumer acceptance of mortgage rates above 6% as the new normal."

Chen Zhao, Chief of Economic Research at Redfin, commented on the situation. Zhao said, "It is clear that we are in a new era and markets will take time to determine how to react to today's Fed meeting." He added, "But one thing is certain: the committee as a whole takes inflation very seriously, which means it is unlikely that mortgage rates will drop substantially in the near future."