Fed’s Jerome Powell Says the ‘Time Has Come’ for Rate Cuts After 23-Year High

At last, “the time has come” for interest rate cuts.

Earlier on Friday, Federal Reserve Chair Jerome Powell gave would-be homebuyers and sellers some much needed hope.

At the central bank’s annual gathering in the Grand Teton National Park in Jackson Hole, WY, Powell said, “We do not seek or welcome further cooling in labor market conditions. The time has come for policy to adjust.”

Just last month, Powell had indicated an interest rate cut from its current 23-year high “could be on the table.”

“From ‘on the table’ at July’s meeting to ‘the time has come,’ in today’s Jackson Hole Symposium address, Chair Powell also stated that ‘my confidence has grown that inflation is on a sustainable path back to 2%,'” says Realtor.com® Chief Economist Danielle Hale. “These are clear indications that a Fed rate cut is ahead.”

What’s expected to happen in September

The Fed’s next policy meeting is scheduled for Sept. 17–18, and the question on everybody’s mind now is just how big this anticipated rate cut could be.

“My expectation, and that of the many investors now, is that the Fed will make a 25 basis point cut in September, and that this is likely the first of several that will be appropriate in late 2024,” Hale explains. “There is a chance that the September cut could be as large as 50 basis points.”

That will depend on the inflation and labor market readings due out between now and the Sept. 18 decision, according to Hale, who says the Fed will remain data-dependent.

“Chair Powell noted that the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” she explains.

The likely impact on the real estate market

The Fed’s actions in the next few weeks and months are expected to have a major impact on mortgage rates—and America’s real estate market.

“Because these cuts are widely anticipated, they have already helped mortgage rates drop into the mid-6% range, and we could see some additional easing in the months ahead,” Hale says. “In fact, the Realtor.com 2024 Housing Forecast Update now anticipates that the typical 30-year fixed rate mortgage will be in the low 6% range by the end of the year.”