The U.S. Federal Reserve is widely expected to deliver a third consecutive interest rate cut on Wednesday, lowering its benchmark to roughly 3.6 per cent — the lowest level in nearly three years. While the move will offer potential relief to Americans facing steep borrowing costs on mortgages, vehicles and major purchases, analysts caution that rate cuts may not immediately translate into cheaper credit, particularly in the housing market where loans are heavily influenced by market forces beyond the central bank.
With key economic data stalled due to the ongoing government shutdown, the Fed is entering the final stretch of 2025 with reduced visibility on inflation and hiring trends. Chair Jerome Powell’s term will expire in May, and President Donald Trump is expected to name a successor within weeks, likely someone more aggressively in favour of rate reductions. That choice, however, could face internal pushback from Fed officials who remain wary of inflation risks. This week’s decision may also set the tone for the early months of 2026.
Many economists believe the Fed will signal a higher threshold for any further cuts when policymakers reconvene in late January. A year earlier, after delivering a third rate cut in December, the Fed paused until September before easing again.
