Federal Reserve Cuts Rates by 25 bps; however, Mortgage Rates still increased.

The Federal Reserve’s first 25 basis point cut of 2025 ended a five-meeting policy hold at the new rate of 4.00%-4.25% range. However, this headline move had minimal impact on mortgage rates, which are now higher this afternoon than yesterday and this morning’s levels. (Fed rate doesn’t directly impact mortgage rates)

The key drivers were the 2:00 PM dot plot, signaling a projection of 50 bps in additional cuts for 2025 (two more), and Chair Powell’s 2:30 PM press conference. The dot plot initially supported bonds (and thus mortgage rates), as markets had only partially priced in this outlook before the dot plot release. Powell’s remarks, however, reversed those gains: he described the cut as “risk management” and noted the dot plot reflects forecasts, not a predetermined plan.

Trump’s recent pick to the Fed, Governor Miran, was the only dissenting Governor in favor of a 50 bps cut. Views are divided among the Fed, a minority anticipate no further cuts in 2025, while a majority

think two more cuts.

Today’s national average 30-year mortgage rate is 6.22%