Fed Cuts 25 Basis Points; What’s Next Is Unclear

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.The Fed voted to cut the federal funds rate, despite growing divisions over economic priorities.Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.How is this page expert verified?NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.Lead Writer & Content StrategistTaylor Getler is a home and mortgages writer for NerdWallet. Her work has been featured in outlets such as MarketWatch, Yahoo Finance, MSN and Nasdaq. Taylor is enthusiastic about financial literacy and helping consumers make smart, informed choices with their money. Head of Content, Home LoansJeanette Margle leads the home loans content team at NerdWallet, where she has worked since 2019. Previously, she led NerdWallet's travel rewards content team and spent three years editing for Upgraded Points while self-employed as an editor and writing coach.Jeanette earned bachelor's degrees in journalism and Plan II Honors from the University of Texas at Austin and has a Master of Education from the University of Houston. A lifelong Texan, Jeanette grew up in a small town in the Hill Country and lives in the Houston area with her husband and daughters. On Dec. 10, the Federal Reserve voted to lower the federal funds rate by 25 basis points. A basis point is one one-hundredth of a percentage point. Mortgage lenders had been expecting a cut, and mortgage rates had fallen in the weeks ahead of the meeting.This move was largely predicted by analysts, despite tensions among central bankers. Still, the path to cutting was not unanimous or obvious. While some committee members, like New York Fed President John C. Williams, had publicly voiced support for a cut, others, including Chicago Fed President Austan Goolsbee, raised concerns about inflation. One reason for these divisions is the lack of recent federal data, which creates a murkier view of the economy.

The Consumer Price Index and jobs report were both canceled for October, and November’s data isn’t scheduled for release until next week. This means the most recent federal employment and inflation data available to the central bankers was from September, making the Fed’s decision far trickier than normal. Mortgage rates already fell ahead of this December meeting, so they won’t fall again just because of today’s decision. The Fed doesn’t set mortgage rates, but it does set the federal funds rate, which banks pay to borrow from each other. When the federal funds rate gets reduced, it can lower lenders’ borrowing costs, so mortgage rates often go down when a cut is expected. Next week the Bureau of Labor Statistics will release key new data that might affect rates moving forward, as the November jobs report comes out on Dec. 16 and the Consumer Price Index will be released on Dec. 18. These will give analysts a pulse-check on the economy. If employment and inflation are both down, we can expect the conversation around the Fed’s planning for 2026 to lean toward another rate cut, potentially pushing mortgage rates down further.If employment and inflation are both up, central bankers will be less likely to cut again, and mortgage rates could rise.If employment and inflation are moving in different directions … well, we can expect that central bankers will continue to disagree about which matters more, and mortgage rates might shift based on public commentary by Fed leaders. Helpful resourcesDownload the app Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product's site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution's Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly. NerdWallet Compare, Inc. NMLS ID# 1617539 NMLS Consumer Access | Licenses and Disclosures California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812 Insurance Services offered through NerdWallet Insurance Services, Inc. (CA resident license no.OK92033) Insurance Licenses Fundera, Inc. NMLS ID# 1240038 NMLS Consumer Access California: California Finance Lender loans arranged pursuant to the Department of Financial Protection and Innovation Finance Lenders License #603L288 NerdWallet has engaged Atomic Invest LLC (“Atomic”), an SEC-registered investment adviser, to bring you the opportunity to open investment advisory accounts (Automated Investing Account and/or Treasury Account) with Atomic. NerdWallet receives compensation of 0% to 0.85% of assets under management annualized, payable monthly, for each referred client who opens an Atomic account and a percentage of free cash interest earned by clients, which creates a conflict of interest. Brokerage services for Atomic are provided by Atomic Brokerage LLC ("Atomic Brokerage"), member of FINRA/SIPC and an affiliate of Atomic, which creates a conflict of interest. See details about Atomic, in their Form CRS, Form ADV Part 2A and Privacy Policy. See details about Atomic Brokerage in their Form CRS, General Disclosures, fee schedule, and FINRA’s BrokerCheck. You also can open a Cash Account offered by Atomic Brokerage which allows you to earn interest on your cash through a cash sweep program.

View Important Cash Account Disclosures.

Neither Atomic Invest nor Atomic Brokerage, nor any of their affiliates is a bank. Investments in securities: Not FDIC Insured, Not Bank Guaranteed, May Lose Value. Investing involves risk, including the possible loss of principal. Before investing, consider your investment objectives and the fees and expenses charged. Images are for illustrative purposes only. NerdWallet™ | 4150 N Drinkwater Blvd, Suite 200, Scottsdale, AZ 85251