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Interest Rate Forecast for September 2025: Will Fed Cut Rates?

August 11, 2025 by Marco Santarelli

Interest Rates Predictions for September 2025: Will the Fed Cut Rates?

As we look ahead to the Federal Reserve's meeting on September 16-17, 2025, everyone's asking the same question: Will the Fed cut interest rates? Considering the fluctuating economic data, I believe it's likely the Fed will cut rates by 0.25% at the September meeting. However, the final decision will depend on key data points released before the meeting. Let's dive deep into the factors influencing this pivotal decision.

Interest Rate Forecast for September 2025: Will Fed Cut Rates?

Where We Stand Right Now

The Federal Reserve has kept the interest rate between 4.25%-4.50% since December 2024. At their July 30, 2025, meeting, they decided to hold steady. At that time, five consecutive meetings had passed without any rate changes. Then, some fresh data came out that made everyone rethink their expectations.

After a disappointing jobs report in July 2025, the chances of a rate cut in September shot up. Before the report, the market predicted only a 37% chance of a cut, but after the report the prediction went up to over 80% according to the CME FedWatch tool. That's a big jump which shows how sensitive the market is to new data.

What's Driving the Fed's Decision?

The economy is sending mixed signals, making the Fed's job much harder. Let's break them down:

  • Inflation: Inflation is still above the Fed's target of 2%. In June 2025, it was at 2.7%, up from 2.4% in May. Core inflation, which excludes food and energy, was at 2.9%. The increased tariffs, with average U.S. tariff rates at about 18.4% in July 2025, are contributing to these higher prices.
  • Labor Market: The labor market seems to be cooling off. The unemployment rate went up to 4.2% in July, up from 4.1% in June. Also, job growth has slowed. More concerning is that past months' job numbers have been adjusted downwards. May and June job gains were revised down by 258,000 jobs!

Here’s a quick summary:

Indicator June 2025 July 2025
Inflation (YoY) 2.4% 2.7%
Core Inflation N/A 2.9%
Unemployment Rate 4.1% 4.2%

Tensions Within the Fed

At the Federal Reserve's July 30th meeting, there was some disagreement. Two governors, Michelle Bowman and Christopher Waller, voted for a rate cut of 0.25%. It had been since 1993 that multiple Fed governors have voted againt the majority position, which shows how much pressure there is to start lowering rates.

Jerome Powell, the Fed Chair, played it cool and mentioned that no decision was made about September. He stressed that the Fed wanted to see more data before making any move. He also said the Fed has to balance two things: Cutting rates too soon, which could cause inflation to rise again, versus waiting too long, which could hurt the job market.

The Tariff Situation

It's undeniable that tariffs are causing some serious headaches. Chair Powell admitted that they have made some goods more expensive. The full effect is still unclear. It's a delicate balancing act for the Fed. They see some tariff-related price increases as temporary.

However, the uncertainty around future tariff policy can hurt business confidence and investment decisions. This high level of doubt is one of the factors the Fed is considering.

Economic Growth and Consumer Spending

Even though the job market is shaky, the U.S. economy grew at a 3.0% rate in the second quarter of 2025. However, this growth was mostly due to trade and lower imports, not strong demand in the U.S.

Domestic final sales only grew by 1.2% in the second quarter, which is the slowest since late 2022. This gives a clearer sense of the economy's momentum: things are slowing down.

Consumer spending, which is a significant factor for economic growth, has also slowed, growing by just 1.4% in the second quarter. This is due to higher interest rates and ongoing inflation affecting people's spending power.

What Wall Street Thinks

Financial markets haven't been able to make up their minds. After Powell's cautious comments in July, the dollar became stronger, and Treasury yields increased. People thought the Fed would not be cutting rates soon, but the weak jobs report changed everything. Market participants now expect more aggressive rate cuts.

Big Wall Street firms have changed their forecasts accordingly. Goldman Sachs now predicts three rate cuts in 2025 like what I've indicated, and expects the federal funds rate to be between 3.0%-3.25% by the end of the year. This is pretty substantial.

BlackRock's Rick Rieder even wondered if the Fed might make a big move and cut rates by 0.50% in September if the job market continues to weaken.

The Global View

What the Fed decides greatly influences global markets and other central banks. Many foreign central banks have already started cutting rates. The Fed's actions will likely affect how quickly other central banks make their own changes.

If the Fed starts slashing interest rates, the U.S. dollar, which has been strong, may weaken. This could affect emerging market economies and trade around the world.

Uncertainty Makes Decisions Tough

The Economic Policy Uncertainty Index hit a high of 243.7 in July 2025. This shows how difficult it is for businesses and policymakers to plan for the future.

Fed officials have said that their forecasts are dispersed. The June 2025 Summary of Economic Projections showed that FOMC participants have different ideas about where interest rates should go.

What About Jobs and Inflation?

The job situation is crucial for the Fed's decision, and the Job Openings and Labor Turnover Survey (JOLTS) has shown fewer jobs and lower hiring rates.

Although inflation has come down from its peak, core inflation remains a concern. Models from the Federal Reserve Bank of Cleveland predict that prices will continue to rise in the near future, potentially reaching 2.9% by August 2025.

The Fed needs to figure out whether price increases are temporary due to tariffs or if they are more permanent.

My Interest Rate Predictions for Sept 2025: A Balancing Act

The Federal Reserve is approaching a crossroads. Based on all the evidence, I believe the Fed will likely cut rates in September. Right now, markets estimate around an 80% chance of a 0.25% reduction.

Will the Fed Cut Rates in September 2025
Evolution of market expectations for Federal Reserve rate cuts in September 2025 based on CME FedWatch tool data

The Fed's next steps will depend on how the economy performs, especially concerning the job market and inflation. I think the challenge will be to figure out recent labor market problems are just a short-term glitch or a sign of something more serious. Though the Fed has some wiggle room to maneuver, the margin for error is small. Given that current unprecedented economic conditions, the September 2025 FOMC meeting could set the tone for monetary policy.

Position Your Portfolio Ahead of the Fed’s Next Move

The Federal Reserve’s next rate decision could shape real estate returns through the rest of 2025. Whether or not a rate cut happens, smart investors are acting now.

Norada Real Estate helps you secure cash-flowing properties in stable markets—shielding your investments from volatility and interest rate swings.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Recommended Read:

  • Fed Holds Interest Rates Steady for the Fifth Time in 2025
  • Fed Projects Two Interest Rate Cuts Later in 2025
  • Interest Rate Predictions for the Next 3 Years: 2025, 2026, 2027
  • When is Fed's Next Meeting on Interest Rate Decision in 2025?
  • Interest Rate Predictions for the Next 10 Years: 2025-2035
  • Will the Bond Market Panic Keep Interest Rates High in 2025?
  • Interest Rate Predictions for 2025 by JP Morgan Strategists
  • Interest Rate Predictions for Next 2 Years: Expert Forecast
  • Fed Holds Interest Rates But Lowers Economic Forecast for 2025
  • Fed Indicates No Rush to Cut Interest Rates as Policy Shifts Loom in 2025
  • Fed Funds Rate Forecast 2025-2026: What to Expect?
  • Interest Rate Predictions for 2025 and 2026 by NAR Chief
  • Market Reactions: How Investors Should Prepare for Interest Rate Cut
  • Impact of Interest Rate Cut on Mortgages, Car Loans, and Your Wallet

Filed Under: Economy, Financing Tagged With: Economy, Fed, Fed Rate Cut, Federal Reserve, inflation, Interest Rate

Fed Holds Interest Rates Steady for the Fifth Time in 2025

July 30, 2025 by Marco Santarelli

Fed Holds Interest Rates Steady for the Fifth Time in 2025

The Fed holds key interest rate steady, maintaining the federal funds rate in a range between 4.25%-4.5%. This decision, announced recently, comes amidst pressure from various sides, including calls for rate cuts and internal disagreements within the Federal Open Market Committee (FOMC). Let's dive into what this means and what we can expect next.

Fed Holds Interest Rates Steady Amidst Internal Dissent

Why This Decision Matters

The Fed's actions (or in this case, inaction) have massive implications for us all. The federal funds rate influences everything from the interest rates on your credit card and mortgage to the overall health of the economy. Imagine it like this: the Fed is the central bank, but they influence all local banks and this decision has an effect nationwide. When rates are lower, borrowing becomes cheaper, which can stimulate economic growth. When rates are higher, borrowing becomes more expensive, which can help to control inflation.

A House Divided

The decision to hold steady wasn't unanimous. Two FOMC governors, Michelle Bowman and Christopher Waller, dissented, favoring a rate cut. This is significant because it highlights the internal debate within the Fed about the current state of the economy. The last time we saw this level of dissent was way back in 1993! Which shows that there is a real divide and struggle to reach this decision. It is also important for people that do not realize these roles make very important decisions that affect us all.

  • Those in favor of easing: Argue that inflation is under control and that the labor market could start to weaken soon.
  • Those in favor of holding steady: May believe that the economy is still relatively strong and that cutting rates prematurely could lead to a re-acceleration of inflation.

Decoding the Fed's Statement

The Fed's official statement after the meeting offered some insights into their thinking. They noted that “growth of economic activity moderated in the first half of the year,” which is slightly less optimistic than their assessment back in June. They also acknowledged that uncertainty about economic conditions “remains elevated.”

Here are the key takeaways from the statement:

  • Economic growth is slowing down.
  • The labor market is still solid, but inflation remains somewhat elevated.
  • Uncertainty is still a major factor.

The Influence of External Views

It's impossible to ignore the external voices weighing in on the Fed's decisions. There have been calls for the Fed to aggressively cut rates, with claims that this would boost the economy. We should note that the Fed is intended to operate independently of the short-term political wins, so this might influence the public's perception of the Fed more than the actual decision making.

What's Next?

All eyes are on the future. What could a rate cut in September look like? The question of whether the FOMC is leaning towards a rate cut at their next meeting in September. Economists have been saying that a rate cut in September may be unlikely.

Looking Ahead: Jackson Hole Symposium

The Fed's annual retreat in Jackson Hole, Wyoming, in late August is another key event to watch. It is here that the Fed chair historically gives a major speech on policy direction. This year's symposium could provide valuable clues about the Fed's future plans.

Navigating Economic Uncertainty

Even for seasoned observers, the future is far from certain. Factors such as global economic slowdowns, geopolitical tensions, and changes in consumer behavior can all throw a wrench into the works. As consumers and investors, we need to stay informed, adapt to changing conditions, and make decisions that align with our own long-term goals.

My Thoughts

Here's my take on all of this:

  • Complexity: The Fed's decision is clearly the result of complex considerations and differing opinions. It shows that the world is never black and white.
  • Independence: The Fed's ability to hold steady despite external pressure is a testament to its commitment to independence.
  • Communication: The Fed needs to do a better job of communicating its thinking to the public. Clearer communication can help to reduce uncertainty and build confidence in the Fed's decision-making.
  • Economic Indicators: It is important to monitor key economic indicators. These include GDP, employment and inflation. These will give you insight into the direction of the economy and potential future actions.

In Conclusion

The Fed's decision to hold interest rates steady reflects a delicate balancing act of many important economic factors. With internal divisions and external pressures weighing on the committee, the Fed is navigating a tricky path forward. It's crucial for us to stay informed and understand the factors that shape this.

Comparison of Fed Statements:

Aspect June Meeting July Meeting
Economic Growth “Continued to expand at a solid pace” “Growth of economic activity moderated in the first half of the year”
Uncertainty “Diminished but remains elevated” “Remains elevated”


Position Your Portfolio Ahead of the Fed’s Next Move

The Federal Reserve’s next rate decision could shape real estate returns through the rest of 2025. Whether or not a rate cut happens, smart investors are acting now.

Norada Real Estate helps you secure cash-flowing properties in stable markets—shielding your investments from volatility and interest rate swings.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Recommended Read:

  • Fed Interest Rate Predictions: No Cut Expected Today, July 30, 2025
  • Will the Fed Cut Interest Rates by 25 Basis Points This Week?
  • Fed Projects Two Interest Rate Cuts Later in 2025
  • Federal Reserve Holds Interest Rates Steady on June 18, 2025
  • What are the Odds of a Fed Rate Cut Today, June 18, 2025?
  • Interest Rate Predictions for the Next 3 Years: 2025, 2026, 2027
  • When is Fed's Next Meeting on Interest Rate Decision in 2025?
  • Interest Rate Predictions for the Next 10 Years: 2025-2035
  • Will the Bond Market Panic Keep Interest Rates High in 2025?
  • Interest Rate Predictions for 2025 by JP Morgan Strategists
  • Interest Rate Predictions for Next 2 Years: Expert Forecast
  • Fed Holds Interest Rates But Lowers Economic Forecast for 2025
  • Fed Indicates No Rush to Cut Interest Rates as Policy Shifts Loom in 2025
  • Fed Funds Rate Forecast 2025-2026: What to Expect?
  • Interest Rate Predictions for 2025 and 2026 by NAR Chief
  • Market Reactions: How Investors Should Prepare for Interest Rate Cut
  • Impact of Interest Rate Cut on Mortgages, Car Loans, and Your Wallet

Filed Under: Economy, Financing Tagged With: Economy, Fed, Fed Rate Cut, Federal Reserve, inflation, Interest Rate

Fed Interest Rate Predictions: No Cut Expected Today, July 30, 2025

July 30, 2025 by Marco Santarelli

Fed Interest Rate Decision: No Cut Expected Tomorrow, July 30, 2025

Will the Fed cut interest rates on July 30, 2025? Based on current economic conditions and market sentiment, it's highly unlikely. Most signs point towards the Federal Reserve holding steady, keeping the federal funds rate right where it is. But why is that, and what could this mean for you? Let's break it down.

Fed Interest Rate Predictions: No Cut Expected Today, July 30, 2025

Understanding the Fed's Role

The Federal Reserve, or the Fed as most people call it, is like the doctor for the US economy. They have a big job: to keep things stable. One of their main tools is setting the federal funds rate. This rate is what banks charge each other for lending money overnight. By adjusting this rate, the Fed can influence borrowing costs across the whole economy.

Think of it like this: if the Fed lowers the rate, it's cheaper for banks to borrow money, which means they can offer lower interest rates to you for things like mortgages and car loans. This encourages people to spend and boosts the economy. But lowering rates also has a downside: it can increase inflation if not controlled.

The Fed's primary goals are two:

  • Maximize employment: They want as many people as possible to have jobs.
  • Maintain price stability: They want to keep inflation around 2%. Too much inflation means things get more expensive too quickly. Too little inflation (or even deflation) is bad, too, as it stifles growth.

What's the Economy Saying Right Now (July 2025)?

Honestly, things are a bit mixed. It's not all sunshine and roses, but it's not doom and gloom either. Let's look at some important indicators:

  • Leading Economic Index (LEI): This is like a sneak peek at what the economy might do in the future. It's been going down, suggesting things might slow down.
  • Coincident Economic Index (CEI): This shows how the economy is doing right now. It's been going up, which suggests solid stability in the present. That's a big positive.
  • Personal Income: People aren't making as much money. This decrease in income could lead to less spending.
  • Real GDP: This is the total value of everything produced in the country, adjusted for inflation. It shrunk in the first part of the year. Which is not a great sign.
  • Inflation: This is where things get tricky. Inflation is at 2.7%, which is above the Fed's ideal target of 2%.

So, we have a slowing economy with inflation that's still a bit high. It’s like trying to bake a cake with a wonky oven.

Here's a quick table to summarize it:

Indicator Details
Leading Economic Index (LEI) Declined, suggesting a potential slowdown
Coincident Economic Index (CEI) Rose, indicating current economic stability
Personal Income Decreased, potentially impacting consumer spending
Real GDP Contracted, reflecting economic deceleration
Inflation Core inflation above the Fed’s 2% target, with a near-term rise likely

What's the Scoop from the Fed Itself?

The Fed is playing it cool, taking a “wait-and-see” approach. The current rate is between 4.25% and 4.5%, and hasn't changed since December 2024.

Fed Chair Jerome Powell has been talking about balancing economic growth with keeping inflation under control. It's a tightrope walk, and he doesn't want to fall off. The FOMC (Federal Open Market Committee), which brings together the Board of Governors and Reserve Bank presidents, is likely to tread cautiously.

Now, not everyone at the Fed agrees. There might be a couple of voices who want to cut rates, but it looks like the majority will want to hold steady. Also there has been public pressure from President Trump to decrease the rates. However, the Fed is likely to make its decision independently.

What Do the Markets Think?

Financial markets are obsessed with the Fed's moves. They try to predict what the Fed will do because it can significantly impact stock prices, bond yields, and the value of the dollar.

There's a tool called the CME FedWatch Tool. It uses data from the market to estimate the probability of different rate decisions. As of now and close to the July 30, 2025, meeting, it shows an incredibly high probability that the Fed will leave rates unchanged. Like, over 95%.

Most investors seem to agree. They think the Fed will hold steady, but perhaps consider cutting rates later in the year if the economy weakens further.

What Happens If… Scenarios

Okay, so what could happen if the Fed did cut rates on July 30, 2025? Or if they stay put?

If Rates Are Cut:

  • Good news for borrowers: Mortgages, credit cards, and car loans could get cheaper.
  • Businesses might invest more: Lower borrowing costs make it easier to expand and grow.
  • Stock market could get a boost: Investors might get excited about the prospect of cheaper money.
  • But…inflation could get worse: Remember, inflation is already a bit high. Cutting rates could add fuel to the fire.

If Rates Remain Steady:

  • A sign of confidence…or caution: It could mean the Fed thinks the economy is doing okay, or that they're worried about inflation.
  • Borrowing costs stay the same: This might slow down growth in areas like housing.
  • Markets might be muted: Investors might wait to see what the Fed says next.

My Two Cents

I think the Fed is in a really tough spot. They have to balance supporting the economy with fighting inflation. Based on everything I'm seeing, I think they'll choose to hold rates steady on July 30, 2025. The inflation numbers are simply too high to justify a cut, and the Fed doesn't want to risk losing credibility.

The biggest wild card is inflation. If inflation starts to come down significantly in the coming months, then the Fed might consider cutting rates later in the year. But for now, I think they'll stay the course.

It all comes down to data. The Fed will be watching the economic numbers closely between now and the July meeting and will make its decision based on what they see. So keep an eye on those reports!

Conclusion

The Fed's decision on July 30, 2025, is a big deal for everyone, from homeowners to business owners to investors. While there's always a chance of a surprise, the current signs point to the Fed holding steady. The real question is what they'll do after that. Hang tight—the Fed's probably going to tell us the plan on July 30, 2025, around 2 pm Eastern Time, where we can then listen to the remarks from Fed Chair Jerome Powell around 2:30 pm on what the next steps are.

Position Your Portfolio Ahead of the Fed’s Next Move

The Federal Reserve’s next rate decision could shape real estate returns through the rest of 2025. Whether or not a rate cut happens, smart investors are acting now.

Norada Real Estate helps you secure cash-flowing properties in stable markets—shielding your investments from volatility and interest rate swings.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Recommended Read:

  • Will the Fed Cut Interest Rates by 25 Basis Points This Week?
  • What to Expect from the Fed's Meeting Next Week: July 29-30, 2025
  • Fed Projects Two Interest Rate Cuts Later in 2025
  • Federal Reserve Holds Interest Rates Steady on June 18, 2025
  • What are the Odds of a Fed Rate Cut Today, June 18, 2025?
  • Interest Rate Predictions for the Next 3 Years: 2025, 2026, 2027
  • When is Fed's Next Meeting on Interest Rate Decision in 2025?
  • Interest Rate Predictions for the Next 10 Years: 2025-2035
  • Will the Bond Market Panic Keep Interest Rates High in 2025?
  • Interest Rate Predictions for 2025 by JP Morgan Strategists
  • Interest Rate Predictions for Next 2 Years: Expert Forecast
  • Fed Holds Interest Rates But Lowers Economic Forecast for 2025
  • Fed Indicates No Rush to Cut Interest Rates as Policy Shifts Loom in 2025
  • Fed Funds Rate Forecast 2025-2026: What to Expect?
  • Interest Rate Predictions for 2025 and 2026 by NAR Chief
  • Market Reactions: How Investors Should Prepare for Interest Rate Cut
  • Impact of Interest Rate Cut on Mortgages, Car Loans, and Your Wallet

Filed Under: Economy, Financing Tagged With: Economy, Fed, Fed Rate Cut, Federal Reserve, inflation, Interest Rate

Will the Fed Cut Interest Rates by 25 Basis Points This Week?

July 29, 2025 by Marco Santarelli

Will the Fed Cut Interest Rates by 25 Basis Points Next Week?

The big question on everyone's mind: Will the Fed cut interest rates this week at least by 25 basis points? With the Federal Open Market Committee (FOMC) clocking in for their meeting July 29-30, 2025, anticipation is high. The most probable outcome, in my view, is no rate cut. Everything points toward the Federal Reserve holding firm and maintaining the existing federal funds rate within the 4.25% to 4.5% range. However, monetary policy is never as cut and dry as headlines make it out to be, so let’s break down the forces at play, what signals to expect, and how this decision might affect your wallet and more.

Will the Fed Cut Interest Rates by 25 Basis Points This Week?

Getting into the nitty-gritty requires first understanding the current economic picture. The U.S. economy as of mid-2025 presents a set of challenges, with both high points and lingering issues.

Here's the general picture from the Fed:

  • Gross Domestic Product: The American economy showcases good growth figures. The Atlanta Fed estimates a Q2 2025 GDP growth of 2.4%.
  • Job Market: On the job front, the unemployment rate sits at 4.2%. However, things might be starting to soften slowly. Layoffs appearing around different companies makes things questionable.
  • Inflation: Inflation, as measured by the Personal Consumption Expenditures (PCE) price index, is currently at 2.6%. Although above the Fed's ideal 2% figure, this is still notably better than the 2022 peak of 7.2%. Core inflation estimates at 3.1% by the end of 2025, due to trade-related issues.

Regardless of the positive figures, there are several underlying problems that affects the nation's economy. Policy making is hard with several issues such as trade policy uncertainties influencing decision making processes. As these factors add up, consumer spending can weaken easily.

Since December 2024, the Fed took some time off from cutting those rates, which can lead to them avoiding such serious decisions at any time.

Understanding the Interest Rate Landscape

So, the million-dollar question (that can affect your money): Will the Fed cut interest rates or not? Based on information given, I don't think they will.

The major consensus is that the rate stays the same. The Fed has made it possible they will “wait-and-see” before doing anything so they can observe the whole picture, supporting their strategy.

Regardless, there are those who are thinking otherwise. Fed Governor Christopher Waller thinks that the rate cut makes total sense to avoid further decline. He argues that the current tax laws could hurt demand than the price.

What to keep an eye on

  1. Interest Rate Stability:
    • No changes at 4.25-4.5% are estimated. *Don't disregard the possible dissenting vote from Fed Governer Christopher Waller.
  2. Economic View:
    • Real GDP Rate: Estimates at 1.4% in 2025. (Down from 1.7% since March)
    • Job Stats: At 4.5% (A slight increase of 4.4% since March)
    • Core PCE Inflation: Estimated at 3.1% (An increase of 2.8% in March)
    • Federal funds rate: 3.9% by the end of 2025
  3. Policy Observations. Pay Attention to the tone used by the FOMC! Market experts will be paying very close attention whenever market experts drop words regarding economic activity.
  4. Quantitative Tightening and Balance Sheet Updates: Be ready for incoming updates regarding focus on interest rate policy.

Dots and Projections: A Close Look

A revised dot plot will not be available yet. The previous version released in June 2025 are good enough, though.

Here are the Projections they made:

GDP Growth: 1.4% for 2025 A slight decrease from 1.7% in March Job Stats: 4.5%, a slight increase of 4.4 from last March Core PCE Inflation: Estimates around 3.1, slightly higher than the 2.8% from March Feds Fund Rate: Estiamtes around 3.9% by the end of the year. (Potentially implies 0.25% decrease in rate)

Remember that all FOMC projections will be followed to the end. Powell also made it clear, so pay attention.

Upcoming financial data and reports everyone should look forward to include:

Main Things to Remember

PCE Inflation – Watch to see how low (or high) the data goes Employment Stats – A slow-down in jobs could lead to a rush to cutback on everything.

  • Sentiments to trade in – An uncertain policy can ruin the chances of recovery

What happens at the meeting and what messages are presented can lead to a host of changes.

  • Stocks: The market may see a decrease if the Feds go for a hawk-like tone (higher interest, inflation watch).
  • Bonds: Rates may rise with a lot of worries with inflation and yields.
  • Currencies and Commodities: If the rates go down, look for more expensive commodities.

Final Thoughts: While managing economic growth, the Feds still need to balance external pressures like those from political groups. And, in my view, the FOMC meeting this week should see stable interest rates with close observation of all economic and monetary signs.

Position Your Portfolio Ahead of the Fed’s Next Move

The Federal Reserve’s next rate decision could shape real estate returns through the rest of 2025. Whether or not a rate cut happens, smart investors are acting now.

Norada Real Estate helps you secure cash-flowing properties in stable markets—shielding your investments from volatility and interest rate swings.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Recommended Read:

  • What to Expect from the Fed's Meeting Next Week: July 29-30, 2025
  • Fed Projects Two Interest Rate Cuts Later in 2025
  • Federal Reserve Holds Interest Rates Steady on June 18, 2025
  • What are the Odds of a Fed Rate Cut Today, June 18, 2025?
  • Interest Rate Predictions for the Next 3 Years: 2025, 2026, 2027
  • When is Fed's Next Meeting on Interest Rate Decision in 2025?
  • Interest Rate Predictions for the Next 10 Years: 2025-2035
  • Will the Bond Market Panic Keep Interest Rates High in 2025?
  • Interest Rate Predictions for 2025 by JP Morgan Strategists
  • Interest Rate Predictions for Next 2 Years: Expert Forecast
  • Fed Holds Interest Rates But Lowers Economic Forecast for 2025
  • Fed Indicates No Rush to Cut Interest Rates as Policy Shifts Loom in 2025
  • Fed Funds Rate Forecast 2025-2026: What to Expect?
  • Interest Rate Predictions for 2025 and 2026 by NAR Chief
  • Market Reactions: How Investors Should Prepare for Interest Rate Cut
  • Impact of Interest Rate Cut on Mortgages, Car Loans, and Your Wallet

Filed Under: Economy, Financing Tagged With: Economy, Fed, Fed Rate Cut, Federal Reserve, inflation, Interest Rate

Interest Rates Predictions for the Next 3 Years: 2025-2027

July 29, 2025 by Marco Santarelli

Interest Rate Predictions for the Next 3 Years: 2025, 2026, 2027

Are you trying to figure out what the future holds for our wallets is always top of mind. And right now, one of the biggest questions that keeps popping up is: what's going to happen with interest rates in 2025, 2026, and 2027? Well, based on what I'm seeing and digging into, it looks like interest rates are likely to gradually decrease over the next three years from the current federal funds rate of 4.25%-4.50% in mid-2025, potentially settling somewhere between 2.25% and 3.1% by mid-2027.

This easing is expected as inflation continues to cool down and the economy navigates various domestic and global factors. Let's dive deeper into what's driving these predictions and what it could mean for you and me.

Interest Rates Predictions for the Next 3 Years: 2025, 2026, 2027

Where We Stand Now: Mid-2025

Think back to the last couple of years. We saw some pretty significant hikes in interest rates as the Federal Reserve (or the Fed, as it's often called) tried to get a handle on inflation. It definitely made things more expensive for a lot of us, from taking out a mortgage to even using our credit cards.

But fast forward to mid-2025, and the picture is starting to shift. The Fed actually began to ease things up a bit in late 2024, bringing the federal funds rate down by a full percentage point from its peak of 5.25%-5.50%. As of June 2025, inflation, as measured by the Personal Consumption Expenditures (PCE) index, has come down to around 2.7%, which is getting closer to the Fed's target of 2%. However, and this is important, core inflation (which takes out those often-swinging food and energy prices) is still a bit higher at 2.8%. This is why the Fed is probably still being a little cautious.

In their fourth meeting of 2025 in June, they decided to hold rates steady. According to their Summary of Economic Projections (SEP) from that meeting, the median forecast is for the federal funds rate to be around 3.9% by the end of 2025. That suggests we might see a couple more small rate cuts (around 0.25% each) before the year is out. They're also expecting the economy to grow a bit slower in 2025 (around 2.0%) compared to 2024 (2.8%), and unemployment might tick up slightly to 4.4%. All of this sets the stage for what could be a pretty measured approach to interest rates over the next few years.

What's Going to Shape Interest Rates?

There are a bunch of moving parts that will play a role in where interest rates go from here. It's not just one thing, but a combination of factors that economists like myself keep a close eye on.

  • The Inflation Puzzle: This is probably the biggest piece of the puzzle. The Fed's main job is to keep prices stable, and they aim for that 2% inflation target. Most forecasts I've seen suggest that inflation will continue to come down, maybe to around 2.2% in 2025 and hitting that 2% mark by 2027. But, and there's always a but, things like new tariffs, ongoing global tensions, or disruptions in the supply chain could cause prices to go back up. For example, I remember reading the minutes from the Fed's May 2025 meeting, and they specifically mentioned that tariffs could significantly increase inflation in both 2025 and 2026. That kind of uncertainty is definitely something to watch.

Graph Showing Projected Inflation Rates from 2025 to 2027

  • The Economy and Jobs: The Fed also wants to see as many people employed as possible. Right now, the economy is expected to slow down a bit, with GDP growth maybe around 1.7% in 2026 before picking up again in 2027. Unemployment has been pretty steady, hanging around 4%-4.2% since mid-2024. If the economy slows down too much, the Fed might be more inclined to cut rates to try and boost things. A strong job market, on the other hand, gives them more flexibility.
Graph Showing GDP Growth vs. Unemployment rates from 2025 to 2027
This scatter plot illustrates the relationship between GDP growth and unemployment rates from 2025 to 2027
  • Trade and Government Policies: You can't talk about the economy without mentioning what the government is doing. Policies related to trade, especially tariffs being proposed, could really throw a wrench in the works. Tariffs often lead to higher prices for consumers, which makes the Fed's job of controlling inflation even harder. I've also seen some legal challenges to these tariffs, which adds another layer of unpredictability. Then there are fiscal policies – things like tax cuts or increased government spending. These can sometimes stimulate economic growth but might also fuel inflation, which the Fed would then have to respond to with interest rate adjustments.
  • What's Happening Around the World: We don't live in a bubble, and what other countries are doing with their monetary policy matters too. It looks like other major central banks, like the European Central Bank and the Bank of England, are also expected to ease their rates. This global trend could put some downward pressure on US rates as well. However, if some countries, like Japan, were to start raising their rates, it could create some volatility in the global financial markets.
  • The Market's Take: It's always interesting to see what the financial markets are predicting. What people who are buying and selling bonds and other financial instruments expect can also influence actual rates. I've noticed that some analysts think the peak interest rate we'll see in this cycle might be higher than what others are predicting for the long run. You see a lot of this discussion online, for example, on platforms like X, where some folks are even anticipating rates to fall to around 3.25%-3.50% by the end of 2025.

Looking Ahead: Interest Rate Forecasts (2025-2027)

Interest Rate Predictions Chart

Now, let's get into some specific numbers. Keep in mind that these are just forecasts, and things can change pretty quickly in the world of economics. But based on a variety of expert opinions and projections, here's a general idea of where interest rates might be headed:

2025: Taking it Slow

  • Federal Funds Rate: The Fed itself is projecting around 3.9% by the end of the year, which, as I mentioned, suggests a couple of small cuts. Some analysts, like those at Morningstar, are a bit more optimistic and think we could see rates in the 3.50%-3.75% range, anticipating maybe three cuts due to lower inflation and slower growth. BlackRock seems to think rates will get to around 4% and then might pause to see how the inflation and jobs data look.
  • 10-Year Treasury Yield: This is a key benchmark for many other interest rates. Morningstar is predicting an average of around 3.25% by 2027, and they think we'll probably see yields in the 3.5%-4% range in 2025.
  • 30-Year Mortgage Rate: If you're thinking about buying a home, this is a big one. Forecasts for 2025 seem to suggest mortgage rates will stay relatively high, maybe averaging between 6.3% and 6.8%. Fannie Mae is predicting around 6.3% by the end of the year, and Realtor.com is expecting something similar, around 6.2%.

Graph Depicting Projected 30-Year Mortgage Rates for the next 3 years (2025-2027)

  • Key Things to Watch: How quickly inflation cools down, whether the economy slows as expected, and what happens with those potential tariffs will be the main drivers this year.

2026: More Downward Movement

  • Federal Funds Rate: By the end of 2026, the Fed's current projection is around 3.4%. Morningstar is again a bit more aggressive, forecasting a range of 2.50%-2.75%, believing that inflation will keep falling and there will be more concerns about the economy. TD Economics is in line with the Fed at 3.4%.
  • 10-Year Treasury Yield: Most predictions have this stabilizing somewhere between 3.25% and 3.5%.
  • 30-Year Mortgage Rate: There's a wider range of forecasts here, from about 5.5% to 6.2%. Morningstar is on the lower end at around 5.0%, while Wells Fargo anticipates rates might still be above 6.4%.
  • Key Things to Watch: Whether inflation gets closer to that 2% target, if GDP growth continues to slow to around 1.7% as expected, and if the unemployment rate stays relatively stable around 4.3%.

2027: Finding a New Normal?

  • Federal Funds Rate: Looking further out to the end of 2027, the Fed's median projection is around 3.1%. Morningstar is still anticipating lower rates, in the 2.25%-2.50% range, and S&P Global Ratings is forecasting around 2.9%.
  • 10-Year Treasury Yield: Most likely to settle somewhere between 3% and 3.25%.
  • 30-Year Mortgage Rate: Predictions here range from Morningstar's forecast of 4.25%-4.5% to others suggesting around 4.75%-5.0%.
  • Key Things to Watch: If inflation stays at that 2% level, if GDP growth stabilizes around 1.8%, and if the global trend of easing monetary policy continues.

Here's a quick summary table:

Metric End of 2025 Forecasts End of 2026 Forecasts End of 2027 Forecasts
Federal Funds Rate 3.50% – 3.9% 2.50% – 3.4% 2.25% – 3.1%
10-Year Treasury Yield 3.5% – 4% 3.25% – 3.5% 3% – 3.25%
30-Year Mortgage Rate 6.2% – 6.8% 5.0% – 6.4% 4.25% – 5.0%

What This Means for You and Me

These potential shifts in interest rates can have a real impact on our everyday lives:

  • For Homebuyers: If mortgage rates do come down to the 6%-6.5% range in 2025 and maybe even to 4.75%-5% by 2027, it could definitely make buying a home more affordable. However, we also need to remember that high home prices and a limited number of houses for sale are still big challenges. While lower rates might help with monthly payments, it's unlikely we'll see a return to the really low rates of the past.
  • For Borrowers: If you have a car loan, you might see those rates edge down a bit too, maybe from around 7.53% in 2024 to around 7% in 2025. And credit card interest rates, which can be pretty hefty, might also fall slightly. Lower borrowing costs can provide some financial relief, but again, they're likely to stay above pre-pandemic levels.
  • For Savers: If you've been enjoying the higher yields on savings accounts lately (some have been offering 4%-5% in 2025), you might see those rates come down to 2.5%-3% by 2027 as overall interest rates decline.
  • For Investors: Lower interest rates can sometimes be good for the stock market because it reduces borrowing costs for companies. However, bond investors might want to think about shorter-term bonds or a strategy called laddering to manage the risk of rates potentially going up unexpectedly.

Things That Could Change the Course

It's important to remember that these are just predictions, and there are several things that could throw these forecasts off:

  • Inflation Sticking Around: If those tariffs or other issues cause inflation to stay higher than expected, the Fed might have to hold off on cutting rates or even raise them again.
  • A Sharper Economic Downturn: If the economy slows down more than anticipated, the Fed might need to cut rates more aggressively to try and prevent a recession.
  • Shifts in Government Policy: Changes in trade or fiscal policy could force the Fed to rethink its strategy.
  • Global Events: Unexpected political or economic events around the world can also have a ripple effect on US interest rates.

Final Thoughts

Based on everything I'm seeing, the most likely path for interest rates over the next three years is a gradual decline. The Federal Reserve seems to be aiming for a delicate balance, trying to bring inflation down to its target while also supporting economic growth. For us regular folks, this could mean some relief in borrowing costs down the road, although we probably won't see a return to the very low rates we experienced in the past.

Of course, the economic road ahead is rarely smooth, and there will likely be some bumps along the way. That's why it's so important to stay informed, keep an eye on what the Fed is doing and saying, and maybe even chat with a financial professional to make sure you're making the best decisions for your own situation. As Federal Reserve Chair Jerome Powell himself said back in March 2025, their approach will continue to depend on the data they see coming in. So, while forecasts can give us a general direction, the actual path of the economy is never set in stone.

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Filed Under: Economy, Financing Tagged With: Economy, Interest Rate Forecast, Interest Rate Predictions, interest rates

What to Expect from the Fed’s Meeting This Week: July 29-30, 2025

July 29, 2025 by Marco Santarelli

What to Expect from the Fed's Meeting Next Week: July 29-30, 2025

Get ready, folks! All eyes are on the Federal Reserve as the Federal Open Market Committee (FOMC) gears up for its meeting on July 29-30, 2025. So, what to expect from the Fed meeting this week? I believe the most likely outcome is that the Fed will hold steady, maintaining the federal funds rate in its current range of 4.25% to 4.5%. But, as always, the devil's in the details, and a lot can happen. Let's dig into what’s driving this expectation and what clues we should be watching for in the Fed's statement and Chairman Powell's press conference.

What to Expect from the Fed's Meeting This Week: July 29-30, 2025

The Current Economic Picture

Before we dive into predictions, we need to understand the backdrop. The U.S. economy in mid-2025 is a bit of a mixed bag. You've got some strong points, but also clouds on the horizon.

According to the Fed's recent statements, here's the general vibe:

  • GDP: The economy's been growing at a decent clip. The Atlanta Fed estimated a 2.4% growth rate for the second quarter of 2025. Not bad at all!
  • Unemployment: The unemployment rate islow at 4.2%. People are working, which is always a good sign. But, and this is a big ‘but', there have been some early signs of things slowing down with layoffs starting to creep higher. This needs to be watched closely.
  • Inflation: Ah, inflation. The PCE price index (that's the Fed's favorite way to measure inflation) is at 2.6%. That's still above the Fed's 2% target, but way better than the bad old days of 2022, when it hit 7.2%. The tricky thing? Core inflation, which takes out food and energy prices, is projected to hit 3.1% by the end of 2025, due in part to tariffs.

Thing is, several factors are making things uncertain. Trade policy is a big one. Then, add in the ongoing debates about fiscal policy. I feel things could easily go south if consumer spending starts weakening.

Since December 2024, the Fed decided to hit the brakes on any interest rate cuts, holding the federal funds rate steady. This shows how they try avoiding any drastic actions, especially knowing that things could change any moment.

The Big Question: Will the Federal Reserve Cut Interest Rates?

Okay, here's what everyone wants to know: will the Fed cut interest rates at this meeting? The simple answer is: probably not.

Most economists and market watchers believe the Fed will keep rates where they are, in the 4.25% to 4.5% range. This is the general consensus. This view is supported by the Fed’s earlier statements to take a “wait-and-see” approach.

Why the hesitation? Well, Fed officials have said, in not so many words, that the current policy is “in a good place.” They want to see how things play out before making any big moves.

However, behind this united front, there are always some dissenting opinions. Fed Governor Christopher Waller, for example, has hinted that he's open to a rate cut. Why? He's worried that all those tariffs might hit demand harder than prices.

What to really lookout for at the July 2025 FOMC Meeting

  1. Interest Rate Decision:
    • Expected: to remain same at 4.25-4.5% *Note: Fed Governer Christopher Waller is open to a rate cut. Be ready for possible dissenting vote.
  2. Economic Projections and the Dot Plot:
    • Real GDP growth: 1.4% for 2025 (down from1.7% from march)
    • Unemployment rate: 4.5% for 2025 (up slightly from 4.4% in March)
    • Core PCE inflation: 3.1% for 2025 (up from 2.8% in March)
    • Federal funds rate:3.9% by year-end 2025
  3. Policy Statement and Press Conference The tone of the FOMC should change with the current economic activities. Investors will be observing at his tone and vocabularies if there is any sign for data dependence, economic activities, inflation or labor market.
  4. Quantitative Tightening and Balance Sheet Policy: Be ready for any updates, given the Fed's focus on interest rate policy.

The Policy Statement and Powell's Press Conference

The official statement released after the meeting is always carefully worded and a sign of what's to come. People are expecting the statement to say that the economy is growing at a “solid pace,” unemployment is “low,” and inflation is “somewhat elevated.”

I would pay attention to what language is used, especially when they talk about inflation and the labor market. Any subtle changes from the previous statement could signal a shift in the Fed's thinking.

But the real show? That's Fed Chair Powell's press conference. His body language, his tone of voice, the specific words he chooses…it all matters. The market will dissect everything that he says.

He'll probably emphasize that the Fed is “data-dependent,” meaning they'll make decisions based on what the economic numbers are telling them. If the next round of inflation data is surprisingly soft, he might hint at a possible rate cut in September. On the other hand, if he sounds more hawkish and emphasizes concerns about inflation, that could put a damper on things.

The Dot Plot and Economic Projections: A Peek into the Fed's Mind

Unfortunately, we won't get an updated “dot plot” at this meeting. (The dot plot is a chart showing where each Fed member thinks interest rates will be in the future.) But the last one, released in June 2025, is still important.

Here were the median projections from June:

  • GDP Growth: 1.4% for 2025. (That's down from 1.7% in March)
  • Unemployment Rate: 4.5% for 2025. (Up slightly from 4.4% in March)
  • Core PCE Inflation: 3.1% for 2025. (Up from 2.8% in March)
  • Federal Funds Rate: 3.9% by the end of 2025. (That implies two 0.25% rate cuts)

The most interesting part of the dot plot was how spread out the projections were. Some members thought there would be no rate cuts this year, while others were calling for one or two. Any hints from Powell about how these projections might be shifting will be closely watched.

Following the Breadcrumbs: Upcoming Economic Data

A few key economic reports will come out before the September meeting, and they'll be crucial in shaping the Fed's decisions:

  • July PCE Inflation (July 31, 2025): I f this report shows that inflation is cooling off faster than expected, it could strengthen the case for a rate cut.
  • August Employment Report (September 5, 2025): A weak jobs report would potentially push the Fed towards cutting rates sooner rather than later.
  • Consumer Sentiment and Spending: If consumer spending starts to tank, that could also push the Fed to act.
  • Tariff Developments: What happens with trade policy will influence things as well.

What It All Means for the Markets

The Fed's decisions and communication will send ripples through the financial markets:

  • Stocks: If the Fed sounds neutral or even a little dovish (meaning they're leaning towards cutting rates), that could steady the stock markets. But if they sound hawkish (worried about inflation), stocks could take a hit.
  • Bonds: I think some experts are anticipating that bond yields will increase, and returns from money market funds may decline if rates are cut.
  • Currencies and Commodities: A dovish signal could weaken the U.S. dollar and give a boost to commodities like gold. Concerns about inflation, on the other hand, could strengthen the dollar.

Looking Deeper: Broader Implications

The Fed is walking a tightrope. They need to keep inflation under control, but they also don't want to push the economy into a recession. All while dealing with outside pressure from politicians and global events.

In Conclusion, Expect the Status Quo

I come to the conclusion that the July 2025 FOMC meeting will see the Fed holding steady on interest rates. But as always, that's not the whole story. Keep an eye on the policy statement, listen carefully to what Powell says, and watch those upcoming economic reports. Things could change quickly, and investors need to be prepared to adapt.

Position Your Portfolio Ahead of the Fed’s Next Move

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15-Year Mortgage Rate Forecast for the Next 5 Years: 2025-2029

July 25, 2025 by Marco Santarelli

15-Year Fixed Mortgage Rate Predictions for Next 5 Years: 2025-2029

Are you thinking about buying a home or refinancing your mortgage? If so, understanding where interest rates might be headed is crucial. So what's the definitive answer/statement on the 15-Year Mortgage Rate Forecast for the Next 5 Years? According to projections, we can expect a general downward trend in rates through 2028, followed by a gradual increase towards the end of the decade. While no one has a crystal ball, let's dive deep into a year-by-year breakdown based on current forecasts and the economic factors that could influence these rates, while trying to discuss all aspects that might interest you.

15-Year Fixed Mortgage Rate Forecast for the Next 5 Years: 2025-2029

Why the 15-Year Mortgage Matters

Before we jump into the numbers, let's quickly discuss why the 15-year mortgage is such a popular choice. It offers a sweet spot between the shorter 10-year term and the more common 30-year option. Here's a quick rundown:

  • Faster Equity Building: You pay off your home in half the time compared to a 30-year mortgage. Imagine owning your home outright in just 15 years!
  • Lower Interest Paid Over the Life of the Loan: Because you're paying it off faster, you save a significant amount on interest. This can translate to tens of thousands of dollars over the life of the loan.
  • Higher Monthly Payments: The tradeoff? Higher monthly payments. But if you can comfortably afford it, the long-term savings are well worth it.

Now, let's get to the main point of why you are here – Let's analyze the projected 15-year mortgage rates from 2025 to 2029 based on forecasts.

Year-by-Year 15-Year Mortgage Rate Forecast (2025-2029)

Alright, let's get down to the nitty-gritty. I've compiled a breakdown of the projected 15-year mortgage rates for the next five years based on projections from the Economy Forecast Agency (EFA) (Updated on 2025/07/03). Remember, these are forecasts, not guarantees, and unforeseen economic events can definitely throw things off course. Always consult with a financial advisor for personalized advice.

2025 Predictions: A Year of Initial Declines

  • Current (July 2025): 5.8%
  • July: 5.44-5.96% (Close: 5.61%) – A promising start with a drop.
  • August: 5.53-5.87% (Close: 5.70%) – A slight uptick.
  • September: 5.37-5.71% (Close: 5.54%) – Further decline.
  • October: 5.40-5.74% (Close: 5.57%) – Stability around the mid-5% range.
  • November: 5.18-5.57% (Close: 5.34%) – A more significant drop.
  • December: 4.99-5.34% (Close: 5.14%) – Finishing the year on a lower note.

Key Takeaway for 2025: The forecast suggests a consistent downward trend throughout the year, potentially driven by anticipated Federal Reserve actions to combat inflation. If you're looking to buy or refinance, the latter half of 2025 might present some favorable opportunities.

2026 Predictions: Continued Descent

  • January: 5.01-5.31% (Close: 5.16%) – Holding steady.
  • February: 4.98-5.28% (Close: 5.13%) – Minimal change.
  • March: 4.99-5.29% (Close: 5.14%) – Still hovering around 5%.
  • April: 4.76-5.14% (Close: 4.91%) – Breaking below 5%.
  • May: 4.63-4.91% (Close: 4.77%) – Continued decline.
  • June: 4.26-4.77% (Close: 4.39%) – A larger drop, signaling potentially bigger savings.
  • July: 4.17-4.43% (Close: 4.30%)
  • August: 4.10-4.36% (Close: 4.23%)
  • September: 4.07-4.33% (Close: 4.20%)
  • October: 4.04-4.28% (Close: 4.16%)
  • November: 3.95-4.19% (Close: 4.07%)
  • December: 3.80-4.07% (Close: 3.92%) – End year below 4%.

Key Takeaway for 2026: The trend continues downward, with rates potentially dipping below 4% by the end of the year. This could be a prime window for those looking to lock in a low rate.

2027 Predictions: Bottoming Out

  • January: 3.63-3.92% (Close: 3.74%) – Start year just below 4%.
  • February: 3.35-3.74% (Close: 3.45%) – Significant dip.
  • March: 3.30-3.50% (Close: 3.40%)
  • April: 3.39-3.59% (Close: 3.49%)
  • May: 3.48-3.70% (Close: 3.59%)
  • June: 3.41-3.63% (Close: 3.52%)
  • July: 3.42-3.64% (Close: 3.53%)
  • August: 3.33-3.53% (Close: 3.43%)
  • September: 3.24-3.44% (Close: 3.34%)
  • October: 3.07-3.34% (Close: 3.17%) – Lowest rates being seen by now.
  • November: 3.06-3.24% (Close: 3.15%)
  • December: 2.74-3.15% (Close: 2.82%) – Rates below 3%.

Key Takeaway for 2027: Rates continue to decline further to unbelievable lows. These lower rates reflect a potentially slow global economy and the lasting impacts of earlier monetary policies.

2028 Predictions: A Potential Turning Point

  • January: 2.69-2.85% (Close: 2.77%) – Continued lows.
  • February: 2.50-2.77% (Close: 2.58%)
  • March: 2.48-2.64% (Close: 2.56%)
  • April: 2.43-2.59% (Close: 2.51%)
  • May: 2.38-2.52% (Close: 2.45%) – Lowest rates.
  • June: 2.18-2.45% (Close: 2.25%) – Rates at rock bottom now.
  • July: 2.19-2.33% (Close: 2.26%)
  • August: 2.13-2.27% (Close: 2.20%)
  • September: 2.20-2.58% (Close: 2.50%) – Increase in rates.
  • October: 2.50-3.04% (Close: 2.95%) – Sharp rise.
  • November: 2.95-3.28% (Close: 3.18%)
  • December: 3.18-3.59% (Close: 3.49%) – Rates start to increase.

Key Takeaway for 2028: Significant volatility. Watch out for this year, as rates could start rising again as the economy picks up.

2029 Predictions: Gradual Increase

  • January: 3.46-3.68% (Close: 3.57%) – Increasing rates.
  • February: 3.57-3.85% (Close: 3.74%)
  • March: 3.70-3.92% (Close: 3.81%)
  • April: 3.73-3.97% (Close: 3.85%)
  • May: 3.85-4.14% (Close: 4.02%) – Rates at about 4%
  • June: 3.72-4.02% (Close: 3.83%) – Slight dip but still increasing.

Key Takeaway for 2029: Rates gradually increase. This could signify a strengthening economy.

Here's a quick table summarizing the year-end 15-Year Fixed Rate Mortgage forecasts:

Year Forecasted 15-Year Mortgage Rate (Year-End)
2025 5.14%
2026 3.92%
2027 2.82%
2028 3.49%
2029 3.83%

Factors Influencing Mortgage Rates: The Big Picture

It's not enough to just look at the numbers. You need to understand what influences them. Mortgage rates are complex and depend on a variety of factors, I would discuss the main ones here:

  • The U.S. Economy: A strong economy generally leads to higher interest rates because the demand for borrowing increases. Conversely, a weaker economy can lead to lower rates to stimulate borrowing and investment.As per the data available for the economy in July 2025, the US economic growth is expected to slow down in 2025, forecasts from organizations like Morgan Stanley and the IMF point to growth around 1.5% to 1.8%
  • Inflation: Inflation is a major player. When inflation is high, lenders demand higher interest rates to protect their returns.The annual inflation rate in the US stood at 2.4% in May 2025. The inflation is expected to have a downward trend partly due to the new tariffs.
  • Federal Reserve (The Fed): The Fed's monetary policy has a huge impact on interest rates. The Fed influences rates by setting the federal funds rate (the rate at which banks lend to each other overnight). Changes in this rate ripple through the economy, affecting mortgage rates.The Fed has been holding interest rates steady at a target range of 4.25% to 4.50% and is expected to shift in second half of 2025.
  • The Bond Market: Mortgage rates are often tied to the yield on the 10-year Treasury bond. When bond yields rise, mortgage rates tend to follow suit.The 10-year US Treasury yield reached 4.76% in February 2025, its highest level since November 2023.

My Personal Thoughts

Having watched the mortgage market for years, I've learned that predicting the future is tough! Economic cycles are unpredictable, and unexpected events (like global pandemics or geopolitical tensions) can throw even the most sophisticated models off track.

That said, I believe understanding the underlying factors is crucial. If inflation remains in check, and the Fed adopts a more dovish stance (meaning they're more inclined to lower rates to stimulate the economy), we could indeed see the lower rates that are being forecasted.

However, keep a close eye on the bond market. Any signs of rising bond yields could signal an increase in mortgage rates. And remember, the housing market itself plays a role. Strong housing demand can put upward pressure on rates.

Strategies for Homebuyers and Refinancers

So, what should you do with this information? Here are a few strategies:

  • If you're considering buying, don't try to time the market perfectly. Focus on finding a home you love and can afford. If rates do drop, you can always refinance later.
  • If you want to refinance, keep a close watch on the forecasts. If rates are projected to fall, you might want to wait. But don't wait too long, as markets can change quickly.
  • Consider locking in a rate. If you find a rate you're comfortable with, talk to your lender about locking it in. This protects you from potential rate increases.
  • Shop around for the best rates. Don't just settle for the first offer you receive. Get quotes from multiple lenders to ensure you're getting the best deal.
  • Work with a qualified mortgage professional. A good mortgage broker or lender can help you navigate the complexities of the market and find the right loan for your needs.

The Bottom Line

The 15-Year Mortgage Rate Forecast for the Next 5 Years suggests a period of declining rates, followed by a potential gradual increase. While these forecasts are valuable, it is important to remember not to hold any forecast as the ultimate truth and that the economy remains very uncertain and ever-changing. Understanding the factors that influence these rates and developing a sound financial strategy helps you make informed decisions about buying or refinancing your home and setting yourself up for financial success.

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Filed Under: Economy, Financing, Mortgage Tagged With: 30-Year Mortgage Rates, Economy, Federal Reserve, interest rates, Monetary Policy, mortgage rates

Interest Rates Predictions for the Next 2 Years by Goldman Sachs

July 16, 2025 by Marco Santarelli

Interest Rates Forecast for 2 Years by Goldman Sachs: 2025-2026

Do you want to know where interest rates are projected in the next two years? Based on their recent analysis, Goldman Sachs Research anticipates the Federal Reserve might initiate interest rate cuts as early as September 2025. This represents a shift from their previous forecast, driven by a combination of factors, including the surprisingly limited impact of tariffs and emerging signs of a softening labor market. But what does this really mean for you and the economy? Let's dive deeper.

Interest Rates Predictions for the Next 2 Years by Goldman Sachs

Why the Shift? Unpacking Goldman Sachs' Revised Forecast

As a plain speaker, it's important to analyze why these big firms are revising their outlooks. It's never just a hunch, it's based on a lot of research and factors at play. Goldman Sachs Research has adjusted their predictions for a few key reasons:

  • Tariff Impact Lower Than Expected: Many feared that tariffs on goods would lead to broad price increases, fueling inflation. However, initial data suggest the actual inflationary impact has been less pronounced than anticipated. Maybe companies are absorbing some of the costs, or global supply chains are finding ways to adapt.
  • Stronger Disinflationary Forces: Disinflation simply means the rate of inflation is slowing down, and there seem to be forces pulling inflation down. This could include increased productivity, technological advancements, or simply a change in consumer spending habits.
  • A Potentially Softening Job Market: While unemployment rates remain low, there are whispers that the job market isn't as rock-solid as it appears. Goldman Sachs notes that while the labor market still looks healthy, it has become hard to find a job. This softening could prompt the Fed to ease monetary policy to support economic growth.

The Fed's Stance: A Balancing Act

The Federal Reserve has a tricky job. They need to balance keeping inflation under control with ensuring that the economy doesn't slip into a recession. Think of it like walking a tightrope – too much tightening (raising rates) could stifle growth too little tightening on the other hand leads to inflation. If inflation is easing and the job market is cooling, it gives the Fed more room to maneuver and potentially lower interest rates.

Goldman Sachs believes the Fed might share their view that the tariff's impact will be short-lived and only influence the price levels once.

What's the Timeline? Goldman Sachs' Rate Cut Expectations

Here's where it gets specific. Goldman Sachs currently projects the following:

  • September 2025: Initial 25-basis-point rate cut
  • October 2025: Another 25-basis-point rate cut
  • December 2025: A third 25-basis-point rate cut
  • March 2026: Continued easing with a 25-basis-point cut.
  • June 2026: Another 25-basis-point reduction.

In total, they're forecasting a terminal rate (the lowest point for interest rates) of 3-3.25%, a decrease from their previous estimate of 3.5-3.75%.

Could They Be Wrong? The Caveats and Uncertainties

It's crucial to remember that these are just predictions. Economic forecasting is notoriously difficult, and numerous factors could throw a wrench into the works. Think about it: a sudden geopolitical event, a spike in energy prices, or an unexpected surge in inflation could all alter the Fed's course.

  • Data Dependency: The Fed has consistently emphasized that its decisions will be data-dependent.
  • Unforeseen Events: Who could have predicted the COVID-19 pandemic and its massive impact on the economy? Black swan events can quickly change the picture and throw all forecasts overboard.

The Implications: What Does This Mean for You?

So, how might these potential interest rate cuts affect your finances and savings?

  • Mortgages: Lower interest rates could translate to lower mortgage rates, making it more affordable to buy a home or refinance an existing mortgage. Good news for potential home buyers and those looking to lower their monthly payments.
  • Savings Accounts: On the flip side, lower interest rates typically mean lower yields on savings accounts and certificates of deposit (CDs). This could make it harder to generate income from savings.
  • Investments: The impact on the stock market is complex and often depends on sentiment. Lower rates can sometimes boost stock prices, but it also depends on how investors interpret the overall economic environment.

My Take: Hope for the best, prepare for the worst

As someone deeply involved in following economic trends, my perspective leans towards cautious optimism. While Goldman Sachs' revised forecast is encouraging, it's important to stay grounded and understand that the economic future remains uncertain. Prepare yourself by diversifying your investments, reducing debt, and having some liquid savings on hand. Don't make any drastic decision based solely on one forecast by anybody, including Goldman Sachs.

Final Thoughts: The potential for interest rate cuts in 2025 offers a glimmer of hope for a more favorable economic outlook. However, remaining informed, adaptable, and prepared for various outcomes is crucial for navigating the ever-changing financial environment.

Plan Smart Around Rate Forecasts – 2025 & 2026

With Goldman Sachs projecting interest rate shifts through 2025–2026, now is the time to lock in investment-grade real estate.

Norada offers high-yield turnkey properties designed to deliver stable cash flow and long-term equity growth—regardless of rate movements.

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Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

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Recommended Read:

  • Interest Rate Predictions for the Next 2 Years Ending 2027
  • Interest Rate Predictions for 2025 and 2026 by Morgan Stanley
  • Interest Rates Predictions for the Next 3 Years
  • Market Reactions: How Investors Should Prepare for Interest Rate Cut
  • Interest Rate Predictions for the Next 10 Years: 2025-2035
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  • When is the Next Fed Meeting on Interest Rates?
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Filed Under: Economy, Financing Tagged With: Economy, Interest Rate Forecast, Interest Rate Predictions, interest rates

Interest Rate Predictions for 2025 and 2026 by Morgan Stanley

July 8, 2025 by Marco Santarelli

Interest Rate Predictions for 2025 and 2026 by Morgan Stanley

If you're wondering what the future holds for interest rates, especially in the next couple of years, you're not alone. According to insights from Morgan Stanley, as discussed in a recent “Thoughts on the Market” podcast, interest rate predictions point towards the Federal Reserve cutting rates, but potentially later and more aggressively than the market currently anticipates.

While the market prices in roughly 100 basis points of cuts by the end of 2026, Morgan Stanley's economists foresee up to 175 basis points, beginning in early 2026. This article will break down their reasoning, explore the key economic factors at play, and discuss the potential implications for investors.

Interest Rate Predictions 2025-2026 by Morgan Stanley: A Deep Dive

The Fed's Tightrope Walk: Inflation vs. Economic Growth

The Federal Reserve's primary job is to manage inflation and promote maximum employment. These two goals often pull in opposite directions. Right now, they're trying to figure out where to strike that balance.

The recent Federal Open Market Committee (FOMC) meeting highlighted this balancing act. While the Fed decided to hold the federal funds rate steady (remaining within its target range of 4.25 to 4.5 percent), their projections suggest two rate cuts by the end of 2025, followed by fewer cuts in 2026 and 2027. Think of it like driving a car – you want to keep it steady, but sometimes you need to tap the brakes or the gas to avoid a crash.

Why Morgan Stanley Expects the Fed to Cut “Late, but More”

Morgan Stanley's perspective, particularly that of U.S. Economist Michael Gapen, is that the Fed will be patient before easing monetary policy, but when they do move, they'll do so with more force than some are anticipating. Here's a breakdown of their reasoning:

  • Tariffs: Tariffs, the taxes on goods imported from other countries, introduce some tricky timing issues. They can initially push inflation higher because businesses often pass those costs onto consumers. This increase in prices can curb consumer spending. Gapen believes the Fed will first observe the inflationary effects before feeling the impact of slowing consumer activity.
  • Immigration: Changes in immigration policy also play a role. Reduced immigration means lower growth in the labor force. So, even if the overall economy slows down, The unemployment rate might not increase as much as expected. This is because there are fewer people entering the job market. The Fed will likely see inflation now, followed by a weaker labor market later, according to Morgan Stanley.
  • Fiscal Policy: Don't expect a huge boost to the economy from government spending. Current fiscal policies are not expected to lead to a big boost to growth, so the Fed can’t rely on that.

Putting it all together, Morgan Stanley believes the Fed will see inflation first and then a weaker economy. Therefore, the Fed will want to be sure that any increase in inflation is under control.

Tariffs: The Elephant in the Room

Tariffs were mentioned almost 30 times during the FOMC press conference, signaling their significant impact on the Fed's thinking. The Fed seems to be operating under the assumption of about a 14 percent effective tariff rate. According to Gapen, you can see the impact of tariffs on the Fed's forecast in three ways:

  • Higher Inflation: The Fed expects inflation to move higher, especially during the summer months. As a result, they've revised their inflation forecasts upward to about 3.0% for headline PCE (Personal Consumption Expenditures) and 3.1% for core PCE.
  • Transitory Inflation: The Fed seems to believe that the inflationary effects of tariffs will be temporary, expecting inflation to fall back toward their 2% target in 2026 and 2027.
  • Slower Economic Growth: The Fed acknowledges that tariffs will likely slow down economic growth, leading them to revise their outlook for real GDP growth downward.

Geopolitics and Oil Prices: Throwing a Wrench into the Works?

The Middle East conflict, while mentioned only a few times in the FOMC press conference, adds another layer of complexity. A spike in oil prices due to geopolitical tensions could further complicate the Fed's job.

Historically, a 10% rise in oil prices (another $10 increase) can lead to a 30 to 40 basis point increase in the year-on-year rate of headline inflation. However, the evidence suggests limited second-round effects and almost no change in core inflation.

In other words, you might see a short-term jump in gas prices, which contributes to overall inflation, but it's unlikely to create a sustained inflationary cycle. Higher gas prices do eat into consumer purchasing power, reinforcing the likelihood of slower economic growth.

Market Pricing vs. Morgan Stanley's Predictions: A Disconnect

It must be remembered that market prices are merely an average across the different paths various investors believe are most likely. The fact that market prices reflect about 100 basis points of cuts by the end of 2026, contrasting with Morgan Stanley's forecast of 175 basis points, highlights a significant difference in expectations. The market is also pricing in some rate cuts for the current year, while Morgan Stanley anticipates the first cuts in early 2026.

This disconnect creates opportunities for investors who align with Morgan Stanley's view.

Yield Curve Implications: Lower Treasury Yields Ahead?

Morgan Stanley projects Treasury yields to move lower, starting in the fourth quarter of this year, aligning with their expected timing of the Fed's first rate cuts in early 2026. They anticipate the 10-year Treasury yield to end this year around 4% and end 2026 closer to 3%.

While the timing of this decline is subject to change, their conviction lies in the direction—lower yields are likely ahead. This suggests investors should start preparing for lower Treasury yields now.

The U.S. Dollar: Heading South?

Morgan Stanley expects the U.S. dollar to depreciate another 10% over the next 12 to 18 months, building on the roughly 10% decline it experienced in the first six months of the current year.

Geopolitical events, particularly those impacting energy prices, could influence this outlook. A significant rise in crude oil prices could benefit countries that are net exporters of oil and hurt those that are net importers. While the U.S. is somewhat neutral in this regard, a surge in energy prices could lead to a temporary pause in the dollar's depreciation.

My Take: Navigating Uncertainty with Informed Decisions

Predicting the future is a fool's errand, especially when it comes to something as complex as interest rates. However, analyzing the viewpoints of economic experts like those at Morgan Stanley can give us a valuable perspective. Here's what I would focus on when investing:

  • Inflation Data: Closely monitor inflation reports, particularly the PCE index, to confirm whether inflation is indeed proving to be transient, as economists are expecting. Any deviation from this path may lead to significant revision in these predictions.
  • Employment Figures: Pay attention to revisions and trends related to employment rates. If there's contraction, the Fed’s hand might be forced to cut rates more than anticipated.
  • Global Factors: Stay informed about potential international developments. Since they impact the dollar, they indirectly also influence rates, inflation, and eventually growth.

Prepare for Interest Rate Shifts with Smart Real Estate Investments

As forecast by experts predict up to 175 basis points in interest rate cuts by 2026, the window for locking in profitable real estate investments is now.

Norada offers turnkey rental properties in stable, cash-flowing markets—helping you capitalize on today’s rates before they potentially drop further.

HOT NEW LISTINGS JUST ADDED!

Speak with a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now 

Recommended Read:

  • Interest Rates Predictions for the Next 3 Years: 2025-2027
  • Fed Projects Two Interest Rate Cuts Later in 2025
  • Market Reactions: How Investors Should Prepare for Interest Rate Cut
  • Interest Rate Predictions for the Next 10 Years: 2025-2035
  • Will Mortgage Rates Go Down in 2025: Morgan Stanley's Forecast
  • Interest Rate Predictions for Next 2 Years: Expert Forecast
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  • Interest Rate Cuts: Citi vs. JP Morgan – Who is Right on Predictions?
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Filed Under: Economy, Financing Tagged With: Economy, Interest Rate Forecast, Interest Rate Predictions, interest rates

US Job Growth Booms in June 2025 With Payrolls Exceeding Expectations

July 5, 2025 by Marco Santarelli

US Job Growth Booms in June 2025 With Payrolls Exceeding Expectations

The US job growth in June 2025 proved surprisingly strong, with nonfarm payrolls increasing by 147,000. This exceeded expectations of around 110,000 and prompted a shift in market expectations, essentially eliminating the possibility of a July interest rate cut by the Federal Reserve. But digging deeper, the report reveals a more nuanced picture, with government hiring largely fueling the growth and certain sectors still struggling.

US Job Growth Booms in June 2025 With Payrolls Exceeding Expectations

A Bird's-Eye View of the June Jobs Report

Let's break down the key takeaways from the June 2025 jobs report. It's easy to get caught up in the headline number, so let's explore below the good and not-so-good insights.

The Good News:

  • Payrolls Exceeded Expectations: The addition of 147,000 jobs signals continued, albeit moderating, economic activity.
  • Unemployment Rate Dipped: Falling to 4.1%, the lowest since February, suggests a tightening labor market.
  • Government Hiring Surged: A robust increase of 73,000 jobs in the government sector, particularly in state and local government fueled by education-related positions.
  • Healthcare Remains Strong: The Healthcare sector continues to be a reliable job creator, adding around 39,000 jobs.

The Not-So-Good News:

  • Drop in Labor Force Participation: The labor force participation rate fell to 62.3%, its lowest level since late 2022, indicating that people are leaving the workforce.
  • Household Survey Showed Weaker Gains: The household survey only showed a 93,000 job gain which is significantly lesser compared to nonfarm payrolls data of 147,000.
  • Uneven Distribution of Growth: Job gains were concentrated in a few sectors, while others saw little or no change.
  • Manufacturing Losses: This sector is very important and it lost 7,000 jobs.

Sector-Specific Insights: Where Are the Jobs Really Going?

It's essential to delve into which sectors are driving job growth. The June report highlighted some clear winners and losers:

  • Government: As mentioned, the government sector was the primary driver of job growth in June, adding 73,000 jobs. This makes up roughly half of all jobs.
  • Healthcare & Social Assistance: Adding a combined 58,000 jobs; these sectors continue to be pillars of job creation.
  • Construction: Saw a moderate increase of 15,000 jobs, possibly reflecting ongoing construction projects.
  • Manufacturing: The data paints a very dim picture by losing 7,000 jobs.

The Federal Reserve's Dilemma: Will They or Won't They Cut Rates?

The strong June jobs report has thrown a wrench into the Federal Reserve's plans for potential interest rate cuts. Prior to the report, there was some anticipation of a rate cut in July. However, the data practically eliminated that possibility, as traders priced in a significantly lower chance of a cut.

The Fed is walking a tightrope, balancing the need to combat inflation with the risk of slowing down economic growth. The jobs report provides conflicting signals. While the strong job gains suggest a resilient economy, the slowing labor force participation rate and uneven sectoral growth indicate potential underlying weakness.

For me, the Fed's decision hinges on the incoming data over the next few months. If inflation continues to moderate and economic growth remains stable, they may consider a rate cut later in the year. However, if inflation re-accelerates or the economy shows signs of significant slowing, the Fed will likely hold steady.

Impact on Financial Markets:

As you might expect, the financial markets reacted swiftly to the jobs report.

  • Stocks Rose: Equities experienced an upward tick.
  • Treasury Yields Increased: Treasury yields rose sharply, reflecting a shift in expectations for future interest rate hikes.
  • Rate Cut Odds Decreased: Market expectations for further rate cuts declined.

The Political Angle: Trump's Take on the Economy

As always, politics plays a role in how economic data is perceived and interpreted. President Trump has been vocal about the need for the Federal Reserve to lower interest rates, even going so far as to suggest that Fed Chair Jerome Powell should resign.

Trump's perspective is that lower interest rates would stimulate the economy and boost job growth. However, some economists fear that cutting rates prematurely could risk reigniting inflation. The interplay between the President's pronouncements and the Fed's independent decision-making adds an extra layer of complexity to the economic outlook.

Long-Term Trends and Challenges:

Looking beyond the immediate data, several long-term trends and challenges are shaping the US labor market:

  • The Aging Workforce: As the baby boomer generation retires, the labor force participation rate is likely to continue to decline.
  • Skills Gap: Many employers struggle to find workers with the skills needed for the jobs of the future, particularly in technology and healthcare.
  • Automation and AI: The increasing use of automation and artificial intelligence is likely to displace some jobs, while also creating new opportunities.

What This Means for You: A Personal Perspective

As someone who follows the economy closely, I believe the June jobs report provides a valuable, but incomplete, picture of the US labor market. While the headline number is encouraging, I think it's important to look behind the numbers and understand the underlying trends and challenges.

Here's what it means for you folks at home:

  • For Job Seekers: Focus on sectors with strong job growth, such as healthcare, social assistance, and government. Upskilling and reskilling can also help you improve your prospects, particularly in high-demand fields.
  • For Investors: Be cautious and diligent. Monitor economic data closely and adjust your investment strategy accordingly.
  • For Businesses: Continue to adapt to the changing labor market by investing in training and development for your employees and exploring new technologies.

Looking Ahead: Factors to Watch in the Coming Months:

These are some of the critical factors I'll be watching in the coming months:

  • Inflation Data: Will inflation start escalating again? I sure hope not.
  • Retail Sales and Consumer Spending: These figures are important because they reflect the overall health of the economy.
  • Federal Reserve Policy: Any hint that the Federal Reserve might shift direction remains of value.

In Conclusion: A Mixed Bag, Demanding Further Scrutiny

The US job growth in June 2025 was undeniably better than expected. But, it's crucial not to take the figures at face value. The details reveal a more complex story, with government hiring driving much of the growth and certain sectors facing challenges. With this information in mind, keep an open mind and stay informed.

Tap Into Real Estate While Job Growth Surges

With U.S. payrolls exceeding expectations in 2025, the strong job market is fueling housing demand—creating ideal conditions for property investors.

Norada connects you to turnkey rental properties in high-growth areas, helping you capitalize on rising demand and build passive income.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

(800) 611-3060

Get Started Now

Read More:

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  • Stock Market Crash: 30% Correction Predicted by Top Forecaster

Filed Under: Economy Tagged With: Economy, Job Growth, Jobs, Nonfarm Payrolls

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