A Fifth Rate Cut Since 2024 — But No Relief for Borrowers
Last week, the Federal Reserve made its fifth quarter-point (.25%) cut to the federal funds rate
since September 2024. Altogether, that’s a 1.25% reduction over the past 14 months.
On paper, that sounds like good news — lower rates should mean cheaper financing for
everything from mortgages to business loans.
But if you’ve been watching the market, you’ve probably noticed the opposite: real-world
interest rates have continued to climb following each Fed announcement.
So what’s going on?
Powell’s Words Are Louder Than His Actions
The key isn’t just what the Fed does — it’s what Chair Jerome Powell says.
During last week’s press conference, Powell confirmed the .25% rate cut but emphasized that the
economy remains “strong and resilient,” with steady job growth and solid consumer spending.
That sounds reassuring, but markets hear something different. When Powell describes the
economy as strong, investors assume the Fed may slow or stop future rate cuts — and that
expectation pushes long-term rates higher.
That’s why, even as the Fed lowers its benchmark rate, mortgage, auto, and credit card rates
aren’t following suit.
This has become a pattern: each time the Fed cuts rates, Powell’s optimistic tone sends market
rates upward. His words have effectively undone the intended benefit of the Fed’s own policy.
A Disconnect Between the Fed and the Real Economy
Powell may see a “resilient” economy, but many Americans don’t. From what we can see,
economic indicators are flashing warning signs — some resembling the patterns that preceded
the 2008 recession.
Consumers are feeling the squeeze from high borrowing costs, reduced savings, and cooling job
growth. For everyday people and small businesses, this doesn’t feel like a roaring economy —
and the disconnect is growing.
The Government Shutdown Adds More Uncertainty
To make matters worse, the ongoing government shutdown has temporarily halted the release
of crucial economic reports on employment, inflation, and GDP growth.
Without these data points, markets are flying partially blind. It’s difficult to know whether the
economy truly remains “strong,” or if the weakness that appeared over the summer has deepened
into the fall.
Once the government reopens and these delayed reports are released, they could dramatically
shift expectations — and with them, interest rates.
What This Means for You
For now, the Fed’s five rate cuts — totaling 1.25% — haven’t translated into lower borrowing
costs. Powell’s comments are keeping markets cautious and real-world rates elevated.
However, once we have updated data and a clearer picture of the economy, we could finally see
some easing in the rates that affect consumers most — from mortgages to personal loans.
If you have questions about how these changes might impact you or want to review your
financial strategy, reach out to me or my team anytime. We’re here to help you stay informed,
proactive, and positioned for whatever comes next.
Trevor Carlson
President – Mortgage Specialist
Heritage Reverse Mortgage
435-359-9000
trevor@heritagehl.com
Heritage NMLS #1497455 Trevor’s NMLS #: 267962
Equal Housing Lender
1060 South Main Street Bldg. A Suite 101B, St George, Utah 84770