Fed Pauses, But Mortgage Rates Are Already Lower

"The Federal Reserve just voted to hold the federal funds rate steady, putting a wrap on its three-meeting streak of rate cuts and demonstrating the central bankers' cautious confidence in the economy. The official statement noted that "in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks." In other words, they're acknowledging uncertainty, but noting that the current situation is safe enough for a wait-and-see approach."

"Interest rates, mortgage or otherwise, aren't technically the Federal Reserve's top concern. The federal funds rate, which is the short-term borrowing rate the Fed actually sets, is the central bankers' main tool for influencing economic activity. The Federal Reserve has a dual mandate of supporting both maximum employment and price stability - essentially, keeping the labor market solid and inflation under control. The Fed uses the funds rate to push borrowing costs up or down in order to keep these goals in balance."

The Federal Reserve voted to hold the federal funds rate steady after three consecutive meetings of rate cuts. The Committee emphasized careful assessment of incoming data, the evolving outlook, and the balance of risks when considering additional adjustments. Mortgage rates moved lower from late last summer through the new year, often ahead of Fed cuts, and the latest announcement is unlikely to directly move mortgage rates. The Fed's primary tool is the federal funds rate, used to balance maximum employment and price stability. Officials will monitor how 2025's cuts play out amid mixed hiring and moderating unemployment data.

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