Fed holds interest rates steady again, citing war concerns

The Federal Reserve plans to keep interest rates where they are after its March meeting, which ended Wednesday, citing concerns over recent spikes in fuel prices around the country related to the conflict in the Middle East.

The federal funds rate will stay at the 3.5% - 3.75% range set during the Fed’s December meeting.

“The implications of developments in the Middle East for the U.S. economy are uncertain,” the Fed said in a statement after the meeting.

The Federal Open Market Committee, which votes as a body on raising or lowering rates, is expected to meet again April 28-29. This will be the third of eight meetings this year and may be the last for Chairman Jerome Powell.

Powell’s term as chairman is expected to end in May.

What does this mean?

The announcement from the Fed means that the cost to borrow money, including for mortgages, could stay about the same.

This isn’t bad as mortgage interest rates hit a 3-year low earlier this year. More buyers are entering the homebuying market as interest rates continue to drop some.

Experts predict the Fed will cut rates later this year, with a majority predicting that the interest rate cut will happen at the June meeting.

How does this affect homeownership?

The Fed’s decisions on interest rates can influence almost every aspect of the economy. Since the Fed cut interest rates in December, mortgage rates have seen a decrease. And interest rates do affect the bond market, which in turn can influence mortgage rates as well.

There are a few scenarios that could be at play:

If investors believe the Fed has done enough for inflation, they could rush into the bond market and drive rates lower.

There’s also the possibility of inflation coming back into focus, particularly as it relates to increases in fuel prices and other geopolitical issues. That has the potential to push rates higher.

Market reaction to the Fed’s decision Wednesday was mixed, with the bond market up slightly and the stock market down significantly, though reactions likely are related to issues broader than the Fed announcement alone.

The bottom line is, if you need to buy a home, you should buy a home. No one knows for certain when the Fed will cut interest rates again or when mortgage rates could drop. If rates drop after you purchase your home, you could always refinance to match lower rates.

The team at Rate is here to help you navigate a tricky housing market. If you have questions, we have team members available to support you. Also, if you know you need to start the homebuying process, we can assist you in getting a mortgage pre-approval.


Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply. 

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