Negotiating + Financing

Fed holds interest rates steady and March cuts are unlikely

  • Federal Reserve officials tout progress taming inflation but note it remains elevated
  • Melissa Cohn of William Raveis Mortgage expects mortgage rates to 'bounce around'
By Jennifer White Karp  |
February 1, 2024 - 12:30PM
Overhead view First Avenue with traffic in Manhattan

The cost of borrowing for mortgages and home equity lines of credit are the highest in more than a decade.


New York City real estate buyers who rely on financing are going to have to wait a little longer for interest rate cuts.

The Federal Reserve concluded its January meeting yesterday and left interest rates untouched, opting to maintain the federal funds target range at 5.25 to 5.5 percent.

In a statement, Fed officials touted progress taming inflation but note that it remains elevated. The statement did not mention interest rate cuts, which indicates cuts in March are unlikely.

The Federal Open Market Committee said, “The economic outlook is uncertain, and the committee remains highly attentive to inflation risks…The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

The current range for the federal funds rate means the cost of borrowing for mortgages and home equity lines of credit are the highest in more than a decade, according to Bankrate. But the improving picture for inflation means a pause for the fast-paced rate hikes seen last year.

Melissa Cohn, the regional vice president of William Raveis Mortgage, says Fed chair Jerome Powell is signaling that the central bank is proceeding cautiously.

“As expected, the Fed left rates unchanged at their first meeting of 2024. While the rate of inflation is dropping, Powell has made it clear that they remain vigilant and will not cut rates prematurely. There have been data points that remain stronger than the Fed would like to see,” Cohn says.

What does this mean for mortgage rates?

“Mortgage rates are likely to bounce around now as the direction of bond yields and mortgage rates remains data-driven,” she says. Cohn points to the ADP report, which revealed fewer new jobs than the market expected.

“All eyes will be on Friday’s jobs report for the direction of rates in February,” she adds.



Jennifer White Karp

Managing Editor

Jennifer steers Brick Underground’s editorial coverage of New York City residential real estate and writes articles on market trends and strategies for buyers, sellers, and renters. Jennifer’s 15-year career in New York City real estate journalism includes stints as a writer and editor at The Real Deal and its spinoff publication, Luxury Listings NYC.

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