Fed in the Crosshairs

 

Fed in the Spotlight

The Federal Reserve is once again front and center, with rumors swirling that President Trump may attempt to fire Fed Chair Jerome Powell. While the Fed is structured to operate independently—hence the staggered terms for the Chair—removing Powell would likely trigger a legal showdown unless there’s evidence of misconduct. Even then, Powell is just one of 12 voting members on the FOMC, so his departure wouldn’t necessarily shift policy direction.

Rate Cuts on the Horizon?

In a more typical economic environment, the Fed might have already cut rates. But with ongoing uncertainty around tariffs and their impact on global growth and inflation, the markets are in wait-and-see mode. Until trade agreements are finalized and tariff levels are known, forecasting remains murky.

That said, here’s what the market is currently pricing in:

  • July 30 FOMC Meeting: Only a 2.4% chance of a rate cut.

  • By October: 100%+ probability of one rate cut.

  • By January: 100%+ probability of a second cut.

Fed Funds Rate – A Quick Refresher

The Fed Funds rate governs overnight loans between banks to meet reserve requirements. It’s a key tool the Fed uses to influence lending activity and, by extension, the broader economy.

  • Mortgage Rates: Not directly tied to Fed rate changes. They’re more influenced by long-term bond yields and inflation expectations.

  • HELOCs & Prime-Based Loans: These do move in direct response to Fed Funds rate changes.

This Market Update and similar such communications are for informational purposes only and are based on publicly available information. These materials are general communications, which are not impartial, and are provided solely for discussion purposes, and not in connection with any product or service offering. The opinions and views expressed in this Market Update are as of the date of this communication and are subject to change. Any forward-looking views and statements contained in this Market Update are based on current estimates or expectations of future events or results. Actual results may differ materially from those described in this Market Update. The views expressed in this communication should not be attributed to Guild Mortgage Company as a whole and may not be reflected in the strategies and products offered by Guild Mortgage Company."

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Tariffs Impact On Mortgage Rates