The Federal Reserve’s decision to cut rates by 25 basis
points today marks a pivotal moment in the current policy cycle. While the move
was widely anticipated, the split vote and the Fed’s messaging signal a shift
toward greater caution. The committee emphasized a “wait and see” approach,
highlighting that future rate moves will depend on clear evidence from incoming
data—especially regarding inflation and labor market trends. The Fed’s
statement recycled language from previous pauses, and Chair Powell’s press
conference reinforced the idea that the bar for additional easing is now
higher.
Markets had fully priced in today’s cut, but the tone of
the Fed’s communication was more hawkish than some expected. The new
projections suggest only one more cut in 2026, with the long-run median
rate unchanged. The Fed acknowledged persistent inflation pressures—driven in
part by tariffs—and a softening labor market, but remains committed to its dual
mandate. The announcement of renewed Treasury bill purchases signals a
continued focus on liquidity and financial stability.
In summary, the Fed delivered on expectations but made it
clear that the path forward will be data-dependent and measured. For capital
markets and mortgage professionals, this means preparing for a period of policy
stability, with the potential for further easing only if economic conditions
deteriorate meaningfully. The message: don’t expect a rapid return to lower
rates—flexibility and vigilance will define the Fed’s stance heading into 2026.
Despite the hawkish tone, mortgages are up post-Fed
announcement. Currently, bouncing around, up 6-11 ticks.
