T
he Federal Reserve's recent interest rate cuts brought relief to many in the real estate industry, but economists predict a slowdown next year. According to Bloomberg, most economists forecast only three rate cuts for 2025, with one more possible by year-end. If the Fed enacts a quarter-point cut at its upcoming meeting, it would represent a full percentage point reduction over the last three months.

    Economists expect the first rate cut of 2025 in March, followed by ones in June and September. Several factors may deter the Fed from further rate cuts, including sticky inflation, an overheating economy and financial markets, and a slight rise in unemployment that has since reversed. The incoming Trump administration's policies, such as mass deportations, tariffs, and tax cuts, could also pose near-term inflation risks.

    Inflation remains a key economic indicator, and higher interest rates are typically used to combat it. However, the Fed may be hesitant to cut rates further if inflation doesn't show significant movement, making it harder to justify additional rate cuts. The impact of Trump's policies on inflation will be closely watched in the coming year.