The Federal Reserve held interest rates steady at its January meeting following three consecutive rate cuts amid uncertainty over inflation and economic conditions.

Federal Reserve governor Michelle Bowman said she still expects declining inflation to allow further interest rate cuts this year, but feels rising wages, buoyant financial markets, geopolitical risks,

The decision reflects a cautious stance as the Fed assesses the direction of inflation and policies President Trump may implement.

After the inflation report, released at the same time as hawkish monetary policy remarks from Fed Governor Michelle Bowman, traders of futures that settle to the Fed's policy rate priced in about a 70% chance that the short-term borrowing rate will be 4.

Consumers and traders are waiting to learn if the Fed’s pause is a one-meeting hold or the start of a longer stretch.

Policy changes: When the Fed adjusts the federal funds rate, it spills over into many aspects of the economy, including mortgage rates. The federal funds rate affects how much it costs banks to borrow money, which in turn affects what banks charge consumers to make a profit.

It's important to understand that the Fed's decision to pause rate cuts will not directly impact mortgage rates. Mortgage rates are actually driven by a range of factors, including the Fed's rate changes. This week's Fed rate decision does, however, have a big influence on where mortgage rates could head.

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump’s second term.

US President Donald Trump is getting his wish that interest rates drop across the world, just not at home, where a strong economy and uncertainty over his own policies have set the stage for the Federal Reserve to diverge from its central bank peers.

Trump said Powell and the Fed "failed to stop the problem they created with inflation" in a post on Truth Social on Wednesday.

Rates are expected to drop in 2025, but a CD ladder can help you earn higher APYs on multiple CDs into the future while maintaining flexibility with your money.