Powell Says No Rate Change "For Now"
Federal Reserve Chair Jerome Powell recently conveyed to Congress that the Fed will maintain its current benchmark interest rate—4.25% to 4.50%—for the time being. He described the U.S. economy as being in a “solid position,” with easing inflation and a stable unemployment rate of around 4.2%
Powell emphasized that while inflation has significantly cooled from its 2022 peak, core inflation remains above the Fed’s 2% target (2.6% core PCE), and short-term inflation expectations have risen, largely due to tariff-related pressures. He underscored concerns that new tariffs could trigger another inflation spike and emphasized the need to carefully evaluate economic data throughout the summer before considering any policy adjustments.
Despite pressure—including from FHFA Director Bill Pulte and former President Trump—to implement rate cuts to support the housing market, Powell held firm, noting that current mortgage rate “lock-in” issues reflect broader affordability challenges.
Looking ahead, the Fed’s forecasts suggest only two modest rate cuts later this year, possibly beginning in autumn or winter—well after observing the inflationary impact of tariffs. In summary, the Fed is choosing patience, balancing a strong economy against emerging price pressures before easing monetary policy.
Why This Matters for Real Estate
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Mortgage markets remain volatile. Although the Fed’s rates don’t directly dictate mortgage rates, they influence bond and mortgage benchmarks, affecting affordability.
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Inflated borrowing costs persist. High mortgage rates continue to impact housing activity, and the pace of rate cuts will directly influence market momentum.
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Buyers should stay alert. Watch for any shifts in tariff policy or inflation data this summer—these could be the triggers that finally prompt rate cuts.