Cleveland Federal Reserve President Loretta Mester said she sees interest rates rising considerably higher before the central bank can ease off in their fight against inflation.  Mester, a voting member this year of the rate-setting Federal Open Market Committee, said she sees benchmark rates rising above 4% in the coming months. That’s well above the current target range of 2.25%-2.5% for the federal funds rate, which sets what banks charge each other for overnight borrowing but is tied to many consumer debt instruments.

After falling back earlier this month, mortgage rates began rising sharply again to the highest level since mid-July. That caused mortgage demand to pull back even further.  Total mortgage application volume fell 3.7% last week compared with the previous week, according to the Mortgage Bankers Association. Volume was 63% lower than the same week one year ago.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.80% from 5.65%, for loans with a 20% down payment. That rate was 3.11% one year ago.  As a result, refinance demand, which is highly sensitive to weekly rate moves, fell another 8% for the week and was 83% lower than the same week one year ago. The refinance share of mortgage activity decreased to 30.3% of total applications from about 66% a year ago.

Oregon’s tax and lottery revenues continue to far outpace economists’ predictions, with the state now expected to take in $600 million more than forecasters predicted just three months ago.  Booming tax revenues from capital gains and businesses could push the state’s unique “kicker” tax rebate up by another $500 million, according to the latest quarterly forecast that. That would bring the total “kicker” rebate to $3.5 billion,