The fees remained the same after the Fed meeting. (ISTOCK))
The Federal Reserve has just met to discuss potential interest rate cuts. this time, The Fed has decided to extend the suspension of rates, Leave rates in the range of 4.25% to 4.5%. The decision was due to stable economic activity, which is expected to grow in the first quarter. Economists were largely hoping for this result.
“The Fed intends to keep the fees where they are today,” predicted Melissa Cohn, regional vice president of William Raveis Mortgage. “[Federal Reserve Chair Jerome Powell] The Fed has repeatedly said it is not in a hurry to cut fees. The Trump administration's tariffs could rekindle inflation, and future interest rate cuts are unlikely. ”
The Fed noted that inflation continues to rise, but unemployment is stable and the labor market remains strong. To bring the economy closer to 2% inflation levels, the Fed ultimately decided to leave the fees where they are.
“While the first quarter economic activity is still on track to report growth, American households are increasingly interested in potential re-inflammation, job security and financial outlook. “At the same time, many are still keeping up with the housing and related services inflation in recent years.”
Despite the slow growth of the economy, consumers are not entirely confident in their economic situation. A variety of social and political actions still affect American households. The newly implemented tariffs are one factor contributing to this uncertainty.
“The Federal Reserve war in the fight against stubborn inflation continues to affect the daily lives of American families,” Anya Gesunterman, director of fund management in the statement, explained in the statement. “Add to this, the Fed needs to look closely at tariff-related price increases right now, which also allows interest rates to be maintained for longer.”
“That being said, we expect mortgage rates to gradually decline through the summer, as the economy appears to continue its so-called “soft landing,” but that's not more than a percentage point,” Gezunterman said.
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Inflation will be eased in February, but Trump's tariffs could derail progress
Two more rate cuts are projected by the end of the year
The fees remained the same after the Fed meeting, but they Two rate reductions have been shown this year. Economists largely agree that consumers will see cuts soon. Barclays analyst Probably expect two quarterly point rate cuts in June and September. They previously believed there would be only one cut in June.
“The softer labor market will lead us to add another rate cut despite higher inflation,” a Barclays analyst said.
Barclay predicts that the labor market speed will increase unemployment by the end of the year, with the unemployment rate forecast to reach 4.3% in October.
The first cut in June is expected to reflect [this] The speed of growth and the increase in unemployment. “The second cut in September is expected to show “signs of rising unemployment and improving monthly inflation prints.”
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Mortgage rates hit two months' lows this week and remain below 7%
Consumer trust fell sharply last month
Many consumers don't think the economy is stable. Consumer Trust Survey. Consumer trust measures how Americans feel about their business and economic situation.
The current situation index fell 3.4 points in February to 136.5, but the forecast index also fell 9.3 points to 72.9. Less than 80 on the index usually indicates a recession on the horizon. This is the first time that an index has been so low since June 2024.
“In February, consumer confidence recorded its biggest monthly decline since August 2021,” said Senior Economist Stephanie Gyade, a global indicator for the conference committee. “This was the third monthly decline, bringing an index to the bottom of the range that has been prioritized since 2022. The view on current labor market conditions has weakened. Consumers have become more pessimistic about future business situations, worsening prospects for future employment, reaching in 10 months.”
More people have planned to buy a home, showing one area of improvement. The very recent decline in mortgage rates could be a reason home buyers are more willing to buy. However, similar to plans to make bigger purchases, such as televisions and other electronics, car purchase plans have declined.
“Inflation expectations for average 12 months of February surged from 5.2% to 6%. This increase could reflect a mix of factors including sticky inflation, but also reflects a surge in the prices of major household staples like eggs and the expected impact of tariffs,” Guichard said. “Trade and tariff mentions have risen sharply and have returned to unseen levels since 2019.”
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Elderly people will earn moderate living expenses by paying social security next year
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