August 8, 2025

For the fifth straight meeting, the Federal Reserve kept its benchmark interest rate (the Federal Funds Rate) unchanged at 4.25%–4.5%. This “rate pause”, which has been in place since January, was expected as the Fed keeps one eye on inflation and the other on the job market.

Here’s the part that matters to you: the Fed Funds Rate doesn’t set mortgage rates, but it definitely influences them. When borrowing costs shift (up or down) for banks, it can trickle down into what you pay for a home loan, auto loan, credit cards, and other borrowing.

The Fed’s job is to balance stable prices with strong employment- and those two goals don’t always play nice together. High inflation (prices) can increase rates or at least keep them from dropping, while an economic slowdown (slow jobs growth) might nudge them lower.

We’ll also have to watch closely to see how the new tariffs ripple through the economy. For now, the Fed’s steady stance suggests they’re waiting for clearer signals from inflation and job reports. Whether rates move up or down next will depend on how those numbers play out in the months ahead.