No, the Federal Reserve is not raising rates; they have been cutting rates in late 2025, with the latest cut in December bringing the federal funds rate to 3.50%-3.75%, aiming to balance a weaker job market with inflation, though future moves are uncertain and data-dependent, with some expecting more cuts in 2026 and others a pause.
J.P. Morgan withdrew its outlook for a January cut, forecasting Fed's next move to be a 25-basis-point rate hike in the third quarter of 2027. Macquarie reiterated its forecast of a rate hike in the December 2026 quarter.
“We can drop interest rates to a level, and that's one thing we do want to do,” said Trump. “That's natural. That's good for everybody. You know, the dropping of the interest rate, we should be paying a much lower interest than we are.”
Since World War II, according to many economic metrics including job creation, GDP growth, stock market returns, personal income growth, and corporate profits, the United States economy has performed significantly better on average under the administrations of Democratic presidents than Republican presidents.
“Given the improved economic momentum and the decline in the unemployment rate, we see less need for near-term cuts to stabilize the labor market,” they wrote.
Yes, the Federal Reserve did cut interest rates three times in late 2025 (September, October, December), reducing the federal funds rate by 75 basis points to 3.50%-3.75% to support a softening economy and weaker labor market, with expectations for further cuts in 2026 but a pause in early 2026 as the market balanced growth and inflation concerns, according to Chase Bank and The Motley Fool.
Effective Federal Funds Rate is at 3.64%, compared to 3.64% the previous market day and 4.33% last year.
As of early 2026, after a series of cuts in late 2025, market odds for a September 2025 rate cut were extremely high (often over 80-90%), driven by cooling labor markets, but the possibility of more cuts in late 2025 was tempered by stronger economic data and persistent inflation concerns, creating conflicting signals for the Federal Reserve.
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
When rates rise, investors often shift their money into bonds because these now offer more attractive yields than before. As a result, companies must work harder to deliver stronger earnings to keep investors interested, and higher borrowing costs can reduce profits, which may lead to lower stock prices.
In his remarks, Trump stressed the need to lower interest rates on home loans and credit cards in order to give aspiring homebuyers more financial flexibility to save up for a down payment on a home and more purchasing power when it comes time to buy.
The Fed rate (Federal Funds Rate) is the overnight lending rate banks charge each other, set by the Federal Reserve, while the Prime Rate is the base rate banks charge their best customers, typically around 3% higher than the Fed rate and used for loans like credit cards and HELOCs. The Fed influences the prime rate by setting the federal funds rate, but individual banks determine the prime rate, which acts as a benchmark for many consumer and business loans.
A good interest rate for a mortgage is about 4.75%. It is lower than the current average rates for both a 15-year fixed loan and a 30-year mortgage, which makes it favorable. In November 2022, the average 30-year fixed rate was 6.61%. This indicates that 4.75% is a good rate for borrowers seeking a mortgage.
Lower interest rates lead to asset price booms, which disproportionately benefit wealthier and older segments of the population.
Financial institutions don't rely solely on RBI funds. They also raise money through customer deposits and other market instruments. If these costs remain high, a reduction in the repo rate may not be enough for financial institutions to comfortably lower loan rates.