The following is MBA SVP and Chief Economist Mike Fratantoni’s commentary following the Federal Reserve’s FOMC statement released this afternoon on monetary policy and the economy:

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“The news from today’s FOMC meeting was that two governors, Bowman and Waller, dissented from the decision to keep rates steady at this time. The FOMC statement acknowledges that economic growth has moderated but given the uncertainty about the future paths for inflation and unemployment, the majority of the FOMC members determined that the better course was to hold rates steady for now.

“The dissenters had previewed their arguments in recent speeches. Their concerns are that the Fed would be better to cut rates now, before weakness in the job market becomes more apparent. While the tariff increases could well lead to a pickup in inflation, the dissenters view that the increase is likely to be short-lived.

“MBA’s forecast is that conditions will evolve such that the Fed will cut rates twice this year and once more in 2026. Softening in the job market is likely to be the primary driver to have the FOMC move its short-term rate target down and closer to neutral.

“Unfortunately for the housing and mortgage markets, the Fed’s actions with respect to short-term rates are likely to have little impact on longer-term rates, including mortgage rates. MBA’s forecast is for 30-year fixed mortgage rates to move just a little lower to perhaps 6.5% over the next year, as longer-term rates continue to be impacted by large deficits and debt and the growing issuance of Treasury securities to fund those deficits, which will likely keep mortgage rates near today’s level even as the Fed loosens monetary policy.”