The Fed expects to cut rates more slowly in 2025. What that could mean for mortgages, debt and more
The Federal Reserve’s third interest rate cut of the year will likely have consequences for debt, savings, auto loans, mortgages and other forms of borrowing by consumers and businesses
NEW YORK (AP) — The Federal Reserve's third interest rate cut of the year will likely have consequences for debt, savings, auto loans, mortgages and other forms of borrowing by consumers and businesses.
But with inflation pressures still elevated and with concern that President-elect Donald Trump's policies could fuel inflation, the Fed indicated Wednesday that it's likely to cut rates more gradually in 2025 than it had projected three months ago. The policymakers now envision two rate cuts next year, not the four they predicted back in September.
The result is that borrowers who have been hoping for much-lower-rate loans could be disappointed. Loan rates may barely budge if the Fed sticks with its plan to cut its key short-term rate only twice next year.
“This could be the last cut for a while,” said Jacob Channel, senior economist for LendingTree. “Because the upcoming Trump administration’s policies might cause a resurgence in inflation or otherwise throw the economy off balance, the Fed might choose to take a wait-and-see approach and hold rates steady at their January meeting.”
