After three straight 25-basis-point rate cuts to end 2025, the central bank decided to keep rates steady again, due in large part to new pressures on both the “full employment” and “steady prices” sides of its dual mandate.
In fact, due to those increasing pressures, it is anticipated that Fed chair Jerome Powell may address the growing concern of stagflation when he speaks to the media at 2:30 p.m. ET.
Both economists and betting markets viewed this rate as certain, even before geopolitical turmoil and rising tech layoffs. Sam Williamson, senior economist at First American, told Mortgage Professional America that a hold was the most likely path.
“Underlying conditions look little changed since the FOMC last met in January, with inflation still above the Fed’s target and the labor market softer, but not weak enough to force immediate action,” Williamson said. “Recent geopolitical events add another layer of uncertainty, particularly through energy prices, but not yet enough to alter the policy picture. That combination is likely to keep the Fed in wait-and-see mode until there is clearer evidence that inflation is moving sustainably lower.”
Things seemed to be calming down on both sides of the Fed’s mandate early in 2026. However, a wave of AI-related layoffs has begun to put pressure on the jobs mandate. Then, the Iran War drove oil prices up, which eventually will show up in inflation numbers.
