The Federal Reserve just delivered its third consecutive rate cut today, trimming the federal funds rate by another 0.25 percentage points to a target range of 3.50–3.75% (midpoint ~3.6%). That’s the lowest level in almost three years.
If you were hoping for the start of a long, aggressive cutting cycle, though, the Fed basically flashed a yellow light. In both its post-meeting statement and the new Summary of Economic Projections (the famous “dot plot”), policymakers made it clear: they’re in all likelihood will pause after this move and are now forecasting only one additional cut in 2026 (down from two cuts previously expected).
What Actually Happened Today
- 25 bps cut → new range 3.50–3.75% ✓
- Three dissents (the most since 2019):
- Two members (Michelle Bowman and another) wanted no cut at all
- Trump appointee Stephen Miran wanted a 50 bps cut)
- Dot plot now shows median expectation of just one 25 bps cut in 2026 and one more in 2027
- Inflation forecasts were revised slightly higher; unemployment forecasts slightly lower
Why the Sudden Caution?
The Fed is walking a tightrope. Inflation is still running above the 2% target (core PCE is around 2.7–2.8%), and the labor market remains remarkably resilient—unemployment is still under 4.2% and job growth, while slower, is still positive. In Fed-speak: there’s no urgent reason to rush rates down when price pressures haven’t fully surrendered yet.
At the same time, financial conditions have loosened dramatically on their own (thanks to the post-election rally in stocks and decline in market-based interest rates), so the economy is already getting some of the stimulus the Fed thought it would have to deliver manually.
What This Means for Your Wallet
Good news: Mortgage rates, auto loans, credit-card rates, and pretty much every borrowing cost tied to the fed funds rate should drift lower over the next few months.
Bad news: That drift will probably be modest and gradual, not the sharp plunge some borrowers were hoping for. The 30-year fixed mortgage is already down to around 6.6–6.8% from the 7.5%+ peak in 2023, but don’t expect it to crash into the 4s or low-5s anytime soon unless something breaks in the economy.
The Political Angle Everyone’s Talking About
President Trump has been vocal—extremely vocal—about wanting much lower rates immediately. Today’s relatively hawkish pause (plus the dissent from his own appointee pushing for a bigger cut) is almost guarantees fresh criticism from the White House in the coming days.
We’re entering what could be the most politically charged period for the Fed since the Volcker era. Jerome Powell’s term as chair ends in May 2026, and the President has made no secret of his desire to install leadership that will prioritize growth over inflation fears.
Bottom Line
The Fed is telling us: “We’re still easing, but we’re not panicking.” They’ll cut a bit more if the data clearly cooperate, but they’re perfectly happy to sit on their hands for a while if inflation stays sticky.
For investors and homebuyers, that probably means the “refi boom” and “rate-cut rally” trade is mostly played out for now. Enjoy the lower rates we’ve already locked in, but temper expectations for dramatically more accommodation in 2026.
The ball is now in inflation’s court.
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Written by Ben Bryk with Coldwell Banker Global Luxury Vero Beach
