Monday, December 8, 2025 

What's going on, and why does it matter?
The two-day Federal Reserve monetary policy meeting kicks off on Tuesday, with the Fed's interest rate decision and monetary policy statement scheduled for release on Wednesday afternoon. Financial markets are widely expecting the Fed to cut short-term interest rates by 0.25%. However, mortgage rates are already at or near one-year lows, and a 0.25% rate cut is already priced into the market. In fact, mortgage rates jumped the last few times the Fed cut rates because the Fed indicated future rate cuts would be less than expected. The same thing may happen this time. The latest economic data the Fed normally relies on, such as the monthly jobs report and the PCE inflation report, is nonexistent due to the recent government shutdown. This means the Fed is flying blind and/or relying on older data. If the Fed indicates caution regarding this week's rate decision or future rate decisions, mortgage pricing may get worse.

What should you do about it?
Be prepared for volatility as financial markets prepare for the Fed's interest rate decision on Wednesday.