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Key Takeaways
- The Fed’s March rate hold aligned with market expectations.
- The annual inflation rate most recently flattened to 2.4% in February, remaining above the Fed’s 2% goal.
- The latest projection materials now show one cut for 2026 as most likely outcome.
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Fed holds in March
As war and geopolitical conflicts drape uncertainty over financial markets, the Federal Reserve chose patience as its course of action.
After ending 2025 with three straight cuts, the central bank began 2026 by holding its federal funds rate range steady in January and now March.
“The Federal Reserve is likely to remain on hold as the economy continues to absorb a series of ongoing shocks. Government shutdown risks, tariff uncertainty, and geopolitical tensions in the Middle East are all weighing on economic momentum,” said Selma Hepp, chief economist at Cotality.
How will mortgage rates react to the Fed news?
Interest rates typically rise alongside increases to the fed funds rate and decline after cuts. However, mortgage rate movements varied in the immediate aftermath of the most recent Fed decisions.
The day following each of the three most recent decisions, the average 30-year fixed rate fell two basis points (-0.02%) after October’s cut from the week prior, rose three (+0.03%) after December’s, and inched up one (+0.01%) after January’s hold, according to Freddie Mac.
Overall, interest rates are lower in 2026 compared to 2025, 2024, and 2023. The average 30-year fixed rate even reached a three-and-a-half-year nadir of 5.98% on Feb. 26 before climbing in the time since.
In its post-meeting statement, the FOMC said economic activity still expands at a solid pace, while low job gains continue, unemployment is stable, and inflation is somewhat elevated.
The annualized inflation rate had an up-and-down 2025 but started this year on downslide. However, it remains above the FOMC’s 2% goal, most recently plateauing at 2.4% in February, according to the Bureau of Labor Statistics*.
The Fed may need to see the inflation rate decrease or employment weaken further before another cut will be called for. The inflation reading for March comes out on Apr. 10.
“With signs of labor market softening alongside renewed pressure on household essentials like food and fuel, policymakers have little incentive to adjust interest rates amid an increasingly uneven and uncertain outlook,” Hepp said.
*In August, President Trump fired the Bureau of Labor Statistics commissioner following a weak jobs report.
The Fed’s role and March’s FOMC meeting
At its March meeting, the Federal Open Market Committee (FOMC) voted in a 11-1 majority to hold the federal funds target range (with the single dissention calling for a 25-basis point cut). This marks back-to-back holds for the central bank.
In addition to holding the fed funds rate, the FOMC will adjust its monetary policy as necessary based on emerging data, risks, and evolving outlooks.
The U.S. annualized inflation rate hit a 41-year high of 9.1% in June 2022 and the Fed began taking action to tame it. Since the beginning of 2025, inflation swung down and back up, starting at 3% in January, hitting a low of 2.3% in April, then flattening at 2.7% to finish the year. It then opened 2026 at 2.4% in January and February. The Fed holds a long-term inflation goal of 2%.
President Trump and his administration repeatedly scrutinized the Fed and its leadership for resisting faster rate cuts. Although the incoming Fed chair is expected to be a rate-cut advocate, the latest projection materials suggest one cut in 2026 as the most likely outcome. The FOMC’s next meeting convenes on Apr. 28-29.
“The housing finance industry began 2026 with the hope that inflation levels would come within the Federal Reserve’s target for a reduction in interest rates,” said Marc Halpern, CEO of Foundation Mortgage. “Unfortunately, this doesn’t seem likely in the near-term, and many of us are abandoning the expectation of several rate cuts for the remainder of the year. Today’s consensus is we may have one rate cut near the end of 2026.”
Yes 16% · No 84%
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In addition to the Fed’s actions, multiple economic and geopolitical factors influence mortgage rates. While the central bank technically doesn’t set mortgage interest rates itself, its monetary policies do intrinsically correlate with mortgage rate movements.
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Should you lock in a mortgage rate?
Multiple influential factors weigh on mortgage rates, subjecting them to high volatility.
Although projections can (and do) shift behind new data and world events, the FOMC’s hold signals caution in increasingly uncertain times. As we’ve seen though, a lot can happen between now and April’s meeting that can change their stance.
“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,” said Rebekah Scott, director of investment brokerage at Atlas Real Estate.
Regardless of what happens to rates in 2026, getting creative in your budgeting and negotiating can help you save. Building home equity is a common way that people gain wealth and one of the biggest advantages of owning property.
If you’re ready to begin your path to homeownership, talk to a local mortgage professional to see what rates and loan types you qualify for.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.
