Powell Indicates Likelihood of Fewer Cuts in 2025
The Federal Reserve in its December FOMC meeting cut rates another quarter point, the third cut of the year, and in doing so expressed more of a “wait and see” attitude for 2025.
“In assessing the appropriate stance of monetary policy, the committee will continue to monitor the implications of incoming information for the economic outlook. The 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 Fed said in its post meeting statement. “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.”
The goal of the Fed in its shifting of monetary policy — including rate changes and involvement in the bond market — is to achieve maximum employment and to keep inflation at 2 percent. It’s December change brings the target range for rates to between 4.25 and 4.5.
“Reduction in short-term rates is an important step towards aligning interest rates with the broader economy,” National Housing Conference President and CEO David M. Dworkin said in a prepared statement on the FOMC decision. “However, it is unlikely this is going to have a significant impact on mortgage rates in the near term. Ultimately investors must be more convinced that inflation is on a permanently downward trend before we see long-term rates come down as well. Until then, the cost of housing will remain too high, and unless we build more housing that is affordable to most Americans, it is going to stay that way.”
The stock market looked to continue a 10-day down streak on the news, the most consistent day-after-day declines in 50 years.
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