T
he Federal Reserve's next move is being closely watched, but for now, mortgage rates are likely to remain stable as the economy navigates uncertain terrain. The Fed's decision not to adjust interest rates after its March 19 meeting was in line with expectations, despite concerns about future inflation and slowing economic growth.

    Federal Reserve Chair Jerome Powell emphasized that the board is taking a wait-and-see approach, gauging the impact of recent policy changes on tariffs, federal job cuts, and deportations. The benchmark rate will remain within the 4.25%-4.5% target range as the Fed continues to assess the economy's trajectory.

    While the Fed isn't ready to act yet, its March forecast suggests two interest rate cuts are likely in 2025, with rates potentially dropping to around 3.9% by year-end. However, Powell noted that determining the impact of tariffs on inflation will be challenging and may delay further progress on lowering inflation.

    Consumer sentiment has taken a hit, but hard data such as unemployment and consumer spending remain positive indicators of a healthy economy. The next three months will be crucial in determining future rate cuts, with some experts warning that tariffs could reignite inflation and make rate cuts less likely.

    For homebuyers, lower rates are welcome news, but they're just one factor to consider amidst declining consumer confidence and weakening economic conditions. As the Fed navigates this complex landscape, its primary goal is to separate sound from noise and gauge where the economy is headed.

    Heading into peak home shopping season, mortgage rates may remain steady or tick down slightly, with some experts predicting two rate cuts later in the year if inflation continues to moderate and economic conditions improve. If that scenario plays out, lower rates could boost affordability and drive increased activity in the real estate sector.