Federal Reserve statement explained – March 2025

Mar 19, 2025

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Officials at the Federal Reserve have kept the target range for the federal funds rate unchanged at 4.25 – 4.5%, following their March meeting.

The Fed appears to be walking carefully to avoid undoing any of the progress made so far in battling inflation, after its peak at 9.1% in June 2022. According to the Bureau of Labor Statistics, the inflation rate rose by 2.8% in February 2025.

The decision to hold interest rates steady also comes amidst uncertainty as new federal economic policies are rolled out. It remains to be seen how new tariffs and federal workforce reductions will affect consumer prices and employment. Some economists have predicted that inflation may pick back up as goods get more expensive.

Setting the federal funds rate allows the Fed to influence the economy and balance the push and pull between employment and inflation. Were the Fed to reduce rates, it could increase consumer spending and demand for goods, which can stimulate employment. However, if the Fed makes it too easy to borrow, it can send prices soaring and speed up inflation.

The unemployment rate crept up to 4.1% in February from 4% in January. Some investors expect the Fed to cut interest rates at least twice this year.

What this means for home buyers

No change to the federal funds rate means that mortgage rates are likely to remain steady. Currently, the weekly average rate is hovering at 6.65% for a 30-year fixed-rate mortgage and 5.8% for a 15-year fixed-rate mortgage.

Those who have been waiting for interest rates to drop to buy a home may find this decision frustrating. However, we’ve also covered why waiting on the Fed for a better mortgage rate doesn’t always make the most sense.

Mortgage rates have also dropped in recent months — and buyers may be noticing. In mid-January, rates hit a 2025 high at 7.04% for a 30-year-fixed rate mortgage and 6.27% for a 15-year fixed rate mortgage. According to Freddie Mac, home purchase applications are up 5% compared to 1 year ago.

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What this means for those refinancing

If you’re looking to refinance your current mortgage, this decision from the Fed means your options will remain similar — at least for now. Those looking to refinance to a lower interest rate may choose to hold off if rates will be holding steady. If you’re looking to tap into your equity to withdraw cash, you still can and don’t have to wait for lower rates. If a refinance will help you achieve your financial goals and you can still afford your monthly payment, it can be the right option for you.

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Rory Arnold

Rory Arnold is a Los Angeles-based writer who has contributed to a variety of publications, including Quicken Loans, LowerMyBills, Ranker, Earth.com and JerseyDigs. He has also been quoted in The Atlantic. Rory received his Bachelor of Science in Media, Culture and Communication from New York University.