Fed Holds Rates Steady, But Cuts Could Be Coming – Economic Uncertainty Looms

Up to March 26, 2025, the federal funds rate has been maintained by the Federal Reserve at between 4.25% and 4.5%. In its most recent Federal Open Market Committee (FOMC) session of March 19, 2025, the Fed projected two interest-rate cuts later in the year, and adjusted its economic forecast to account for softer growth and rising inflation expectations.

Austan Goolsbee, head of the Federal Reserve Bank of Chicago, said he expects interest rates “considerably lower” in 12 to 18 months. But he added that economic dangers, particularly from recent tariff moves, might push back the timing of these reductions.

Neel Kashkari, Minneapolis Federal Reserve Bank president, urged the Fed to maintain the present interest rate for some time amid uncertainty over tariffs by  President Trump. The tariffs would either be increasing expenses, demanding higher rates, or slowing growth, which would require lower rates.

In the mortgage market, the average rate of a 30-year fixed mortgage is 6.99%, which is a decline of 0.08 percentage points from last week.
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In brief, while the Federal Reserve has left the federal funds rate stable, projections indicate potential rate cuts later this year. Economic unknowns, particularly on trade policies, may influence the timing and magnitude of these adjustments.

By Editor-in-Chief Timothy Gocklin, MBA, MSF