Federal Reserve Rate Cut Outlook & Mortgage Impact Spring 2026

Will mortgage rates rise after the Fed meets?

The Federal Reserve’s Open Market Committee next meets on March 17 and 18. Will the meeting result in a rate cut? Or will the committee keep rates steady (or possibly even raise them)?

The annualized inflation rate most recently decreased to 2.4% in January but still remains above the Fed’s long-term goal of 2%.

The central bank held rates at its first meeting of 2026 following three-straight cuts. How will the latest economic indicators and geopolitical tensions weigh on mortgage rates and March’s Fed rate cut decision?

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Will the Fed cut rates in March?

The Federal Reserve’s prime responsibilities include stabilizing the U.S. financial system and setting monetary policy. Maintaining a long-term inflation rate of 2% plays a major part in that since inflation near that level keeps consumer prices steady.

The Fed’s Open Market Committee most recently held the federal funds rate range in January after making 25-basis-point cuts at the final three meetings in 2025.

The latest inflation reading fell to 2.4% in January after flattening at 2.7% in December, according to the Bureau of Labor Statistics* (BLS). With uncertainty pervading the economy, the jobs market weakening, and the rising scourge of war, an overwhelming majority of the market believes the FOMC will hold in March, maintaining its wait-and-see approach in increasingly unstable times.

“Most forecasters expect rates to hover in the low 6% range through mid-year, with potential for one or two additional Fed cuts later if inflation continues cooling or the labor market weakens further,” Rebekah Scott, director of investment brokerage at Atlas Real Estate, told The Mortgage Reports. “That said, there’s genuine uncertainty in the air. Tariff policy remains volatile, Powell’s term ends in May, and economic data is running through a murky period with shutdown-related delays.”

Many experts anticipate more cuts and interest rates to gradually descend over 2026. However, the Trump administration’s wealth and power consolidation creates volatility and vulnerability, and could change the course of the economy and FOMC’s plans at any time.

The annualized inflation rate surged in 2021 and ultimately hit a 41-year high of 9.1% in June 2022, according to BLS data. That year, the Federal Open Market Committee (FOMC) hiked the federal funds rate as a counterbalance. Since then, the Fed adjusted its monetary tightening policy multiple times. The central bank waited for sustainable economic softness before loosening its monetary policy and called for cuts in 2024 and 2025.

*In August 2025, President Trump fired the Bureau of Labor Statistics commissioner following a weak employment report.

Descending interest rates could be put on hold

Since the start of 2023, the average 30-year fixed mortgage interest rate ranged between 5.98% and 7.79%, according to Freddie Mac. As of this writing, the latest weekly average 30-year fixed rate mortgage reached 6% on March 5.

Although the annualized pace of inflation stagnated since 2024, it still sits above the Fed’s goal. Because of this, tightening monetary policies could always return until inflation gets brought down to a normalized level. Interest rates are notoriously difficult to predict, but typically rise in response to Fed tightening and fall with loosening.

The tea leaves for the March meeting likely point to the Fed opting for stability amid growing unpredictability, and ultimately holding the fed funds rate steady.

“Per comments from Fed governors, the war, and in particular the risk it has introduced for inflation, has created a lot more uncertainty around the timing of future Fed rate cuts,” Erica Adelberg, chief MBS strategist at Bloomberg Intelligence, told The Mortgage Reports.

Some lenders will allow you to lock in a rate for 90 days at little or no cost so you’re protected from higher rates if you don’t close quickly. Some lenders are even offering borrowers refinances without repeat lending fees or appraisal fees when rates eventually hit a down cycle. When mortgage shopping, be sure to ask your loan officer about these and potentially other incentive services.

Mortgage rates and the Fed’s role

The Federal Reserve doesn’t determine mortgage rates. Instead, rates are intrinsically tied to Treasury yields, which typically follow the Fed’s actions. The latest FOMC projection materials show more rate cuts could be in store over the next year, with the caveat that they will make policy adjustments as necessary.

The fed funds rate is the amount banks pay to borrow money from each other overnight and an increase signals higher inflation and economic expansion. Mortgage interest rates typically rise in response to growth in the fed funds rate.

How mortgage rates respond in the immediate aftermath of these FOMC meetings has been a mixed bag over the last year. Following the three most recent rate decisions, they fell two basis points (-0.02%) after October’s cut, rose three (+0.03%) after December’s, and inched up one (+0.01%) after January’s hold.

“While many people look to the Federal Reserve for signals on the economy’s direction, recent history shows the market is ultimately the more powerful force,” Jeffrey Ruben, president at WSFS Home Lending, told The Mortgage Reports. “The Fed’s actions and commentary certainly have an impact, particularly on short-term rates, but it comes back to the broad-based market that’s driving these rates. Unless there’s a major move from the Fed, we likely won’t see a dramatic change. A dramatic move could cause of bit of rate fluctuation, but what starts with perception eventually settles down to reality.”

Advice for borrowers

So, should you lock in a rate or wait?

Mortgage rates came down to three-and-a-half-year lows to begin 2026. While we don’t have (and may never have) the rock-bottom rates from Covid’s peak, they’re still below average historically. Many people build wealth and a financial buffer through home equity, and you can always refinance during rate downcycles to lower your monthly payments.

Since mortgage rate fluctuations depend on several factors, focusing on your specific budget and finding a home that fits it will likely be more prudent than trying to predict how the market will play out.

“Rates could drift lower if economic weakness persists, or they could bounce back if inflation surprises to the upside. My advice: don’t try to time the bottom. If you find a home that works and a rate near 6%, that’s a solid position by any historical standard,” Scott said.

If you’re ready to become a homeowner, speak with a local mortgage lender to see what loans and interest rates you can qualify for ahead of March’s Fed meeting.

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