Feds Trim Interest Rates by 50 Points

The Economy is strong overall and the Labor market has cooled
Inflation has eased from a high of 7% to 2.2% (their goal is 2%)
They announced the lowering of the Fed Rates by .50% (from 5.5% down to 5.0%)
Housing fell in the 2^nd quarter after a strong rise in the 1^st quarter
Unemployment has moved up, although still “low” at 4.2% (projected to be 4.4% by end of year)
Last year was in the mid 3% range
Their Goal is for maximum employment and stable prices
No preset course, they are making decisions meeting by meeting…no “set plan” for more rate cuts, but will continue to “watch all the data”

Regarding the Housing market

People are not wanting to sell due to their current low rates obtained during the pandemic
As rates come down, people will ease into the idea of giving up the low rate
Housing issue is challenging due to low inventory at the moment

Regarding Mortgage Rates

Most Lenders have already dropped rates in anticipation of fed rate cuts
Rates dropping further will depend on the economy, but they expect the process to take time during their “recalibration” to bring stability

Overall, they are expecting 2025 to be a good year!

For more info on the Fed Rate history, see this link:

Here is a Graph looking back at the last 5 years.

You can see the Fed rate was down to .25% during the pandemic, but prior to that, we were under 2.00%.

From March 2022, we started climbing where it peaked at 5.25% in July of 2023 and remained until Today’s announced rate cut.