The Federal Reserve left the federal funds target range unchanged at 3.50%–3.75% on Wednesday, a widely anticipated outcome that nevertheless drew dissent from two policymakers. Fed Governors Stephen Miran and Christopher Waller both voted for a quarter-point cut, marking a rare double dissent even as the broader committee signaled patience.
Despite those dovish votes, the Fed appears firmly in pause mode. Policymakers pointed to resilient activity and improving labor-market signals, tweaking the policy statement in ways that suggest earlier concerns have eased. Economic activity is now described as expanding at a “solid pace,” upgraded from “moderate” in December, while the unemployment rate is said to be showing “some signs of stabilization” after previously edging higher.
“We see the current policy rate as appropriate to support both of our goals,” Federal Reserve Chair Jay Powell said at his press conference.” The central bank will continue to make decisions on a meeting-by-meeting basis.”
For allocators and deal makers, the decision largely validates existing playbooks. “The Fed’s decision to hold rates steady came as no surprise to real estate investors, who remain focused on market fundamentals and long-term growth drivers as much as the interest-rate environment,” Marion Jones, principal and executive managing director of U.S. capital markets at Avison Young, told Connect Money. “While investors generally view today’s rate levels as more manageable than in recent quarters, further easing would certainly be welcomed.”
Markets are only modestly more dovish than the Fed’s 2026 rate projections and are no longer pricing in meaningful policy moves beyond that horizon. That alignment reflects a central bank increasingly comfortable that risks to growth and inflation are balanced.
Bryan Jordan, chief strategist at Cycle Framework Insights, told Connect that “The Fed is taking a go-slow approach in this cycle,” noting that the funds rate has only been reduced by 1.75 percentage points since September 2024, the slowest start to a cutting cycle since the late 1980s. He argues a measured stance is warranted given “the relatively rare combination of upside inflation risks and downside labor market risks,” along with geopolitical uncertainty and patchy data. Still, Jordan expects the next move to be a cut, pointing out that “a rate cut cycle hasn’t ended with the federal funds target at or above its current level since the mid-1980s.”
The pause reinforces a market already adjusting to higher-for-longer assumptions. “The Fed’s decision to maintain rates doesn’t materially impact our outlook on the market,” said David Scherer, co‑CEO of Origin Investments, adding that the move “falls within our expectations and won’t affect our approach moving forward.”
Nicole Fenton, a partner in HSF Kramer’s real estate practice, noted that many transactions “were put together before the recent cuts began to reset expectations,” and that with no cut this meeting, “that process continues for a bit longer” as lenders and investors re‑underwrite terms to current conditions.
Beyond the policy rate, balance sheet policy is quietly coming back into focus as the central bank noted it will restart bond purchases as necessary “Arguably more consequential for financial markets than the policy rate is the Fed’s balance sheet,” said Thomas Raymond, founding partner of Callan Family Office. That incremental bond buying, he said, “effectively breathes oxygen into financial markets and has been a historic tailwind for asset prices.”
For the markets, the message is one of stability rather than stimulus: rates may eventually move lower, but the burden of proof has shifted, and investors should expect a longer stretch of pause as policymakers weigh incoming data against increasingly balanced risks.
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