Interest Rate Outlook Changes
's December projection of two rate cuts in 2025 is now met with skepticism by economists and , with many expecting only one cut, if any, due to falling unemployment and the anticipation of new White House policies.
The potential for fewer rate cuts this year could lead to prolonged high mortgage rates and expensive borrowing costs, although mortgage rates also depend on the 10-year Treasury note yield, not solely on Fed's actions.
Economic and Policy Considerations
Federal officials, including Fed Governor and from the Chicago branch, cite a stable labor market and ongoing inflation above the 2% target as reasons for a cautious approach to rate cuts, amidst uncertainties from potential Trump administration policies.
The upcoming testimony of Fed Chair before could address pressure for quicker rate cuts and discussions on crypto regulation, banking regulation, and de-banking allegations, reflecting the Fed's multifaceted challenges.