Bank of America predicts the Federal Reserve will keep interest rates steady through Powell’s tenure. Wall Street and Main Street’s hopes for a “soft landing” clash with borrowing reality. The forecast suggests the last rate cut of the Powell era may have already happened, leaving borrowers in a “higher-for-longer” situation.

Bank of America’s analysts point to a December jobs report, indicating the Fed won’t cut rates in January. Unemployment dropping to 4.4% solidifies the hold, with analysts predicting no more cuts under Powell. The Fed’s focus on low inflation and unemployment faced challenges in 2025, possibly contributing to Powell’s uncertain future.

Despite three rate cuts in 2025, the Fed is now expected to pause. This may disappoint borrowers looking for relief. The shift in leadership could bring different economic strategies, but with inflation concerns, it’s uncertain if homebuyers will benefit. The Fed’s actions impact Treasury yields and, indirectly, mortgage rates.

President Trump’s directive to Fannie Mae and Freddie Mac to buy MBS in the open market led to a drop in mortgage rates. The move mirrors the Fed’s Quantitative Easing strategy. While the Powell-led Fed may halt rate cuts, the White House’s intervention could continue to lower mortgage rates, providing relief for homebuyers.

The White House’s actions could help homebuyers by reducing mortgage rates even as the Fed pauses on rate cuts. The GSEs’ liquidity boost mirrors the Fed’s strategy on a smaller scale. While the central bank may be done with cuts for now, borrowers might still see mortgage rates decline, offering some financial relief.

Read more at Yahoo Finance: BofA pours cold water on what’s next for rates under Powell