📊 Fed Decision: No Rate Cut, But Hints at Cuts Later
On Wednesday, the Fed held the federal funds rate steady at 4.25–4.50%, marking the fourth consecutive meeting without change
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policies,” said Fed Chair Jerome Powell
🔍 Key Takeaways
- Inflation concerns: Powell emphasized that inflation is likely to remain elevated due to new tariffs and geopolitical tensions, particularly in the Middle East
- The Fed is closely monitoring how much of these added costs are being passed on to consumers
- Economic outlook downgraded: GDP annualized growth projections for 2025 were reduced by 0.3%, now forecast at 1.4%
- Two cuts still forecasted: According to the Fed’s “dot plot,” two interest rate cuts are still expected in 2025, though the timeline remains uncertain and data-dependent
🏠 What Does This Mean for Mortgage Rates?
- Mortgage rates remain elevated, with 30-year fixed rates still hovering near 7%
- Even though the Fed cut interest rates in late 2024, mortgage rates haven’t dropped significantly, largely due to ongoing inflation pressures, high Treasury yields, and market uncertainty
- Projections suggest only modest relief later in 2025, with rates potentially easing to 6.4–6.7%, but a return to sub-5% rates remains unlikely in the foreseeable future.
