Policymakers at the Federal Reserve kept interest rates steady on Wednesday, in a move that was largely predicted amid recent upticks in inflation and an ongoing conflict in Iran.
The decision strays from the three rate cuts implemented as a result of Fed meetings in 2025, a year during which the committee withstood repeated pressure from the Trump administration to lower interest rates until rising unemployment convinced it that there would not be an attendant resurgence of inflation.
In a statement issued today, the Fed said, “Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate[,]” which involves “supporting maximum employment and returning inflation to its 2 percent objective.”
In its remarks, the Fed left the door open to future rate cuts, writing that “[t]he Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
Although the Fed does not dictate mortgage rates, its decision impacts what it costs borrowers to take out loans for home purchases. As a result, the Fed’s moves today are being closely watched by experts and real estate professionals — many of whom are eager to make sense of the spring market.
To add to the uncertain outlook, mortgage applications plummeted by 10.9 percent last week, with higher rates and overseas unrest as key drivers. In his comments on that data, Mortgage Bankers Association Vice President and Deputy Chief Economist Joel Kan cited factors including “conflict in the Middle East[,]” elevated oil prices and “the risk of a broader inflationary shock” as having potential impacts on the mortgage market.
