Meet the TeamBlogReviewsMortgage CalculatorsFirst-Time HomebuyersContact Us
Link Four
Link FiveLink SixLink Seven
Apply Now
Tips

Powell Puts a Lid on The Rate Debate, But Where's The Bottom?

The CL Team
The CL Team
May 19, 2025

Every year, the Federal Reserve (aka "the Fed") gathers in Jackson Hole, WY with a bevy of other central bankers and academics to discuss and comment on monetary policy in a setting that's slightly less formal than normal.  Despite the scenic backdrop, Jackson Hole speeches by the Fed Chair have a somewhat reliable history of relevance to financial markets--especially those that dictate interest rate movement.

In this year's case, the symposium was almost perfectly timed to give Chair Powell an opportunity to append his last major appearance in the press conference that followed the Fed meeting just over 3 weeks ago. Rates liked what he had to say back then as well, but in Friday's speech, he said it a bit more forcefully.

In not so many words, Powell made it clear that the default game plan is to cut rates at the September meeting just under 4 weeks from now.  In fact, as far as financial markets are concerned, the only uncertainty is whether the rate cut will be the minimum 0.25% or double that amount.

To be fair and clear, that's about where the market ended up after the last speech, but that was followed by several big ticket market movers that temporarily convinced traders the Fed would be cutting by AT LEAST 0.50% a few short days later.  For a few moments, the market was actually closer to a 0.75% cut!

The CL Team Expected Fed Funds Rate chart

Over the 2 weeks that followed, several economic reports forced a rethink of those assumptions, thus putting Powell in a position to put a ceiling on near term rate expectations (rather than comment on how quickly rates might move lower).  His speech certainly delivered said ceiling and also stayed clear of signaling any low rate exuberance.  As can be seen in the chart above, it was ultimately small potatoes compared to recent volatility.

For their part, mortgage rates had a "nice" day, making a modest move down to the lowest levels in just over 2 weeks.  For those who prefer their milestones a bit more grandiose, that also makes today the 3rd best day in well over a year.

The CL Team 30 year fixed mortgage rate index chart

Despite the apparent clarity at the moment, it's good to keep the recent dichotomy in the data in mind.  On the one hand, we had weak economic data in early August that helped drive rate expectations as low as they were.  On the other hand, the economic reports in the following weeks helped push rates quickly back in the other direction. Since then, we've been consolidating in a narrower, relatively calmer range as seen in the chart of 10yr Treasury yields below.

The CL Team 10 year treasury yield chart

Even in the present week, economic data is far from signaling any sort of contraction or turmoil.  The Jobless Claims report--the most timely major labor market indicator--continues falling in line with the last 2 years.  This red line would need to be breaking up and away from the others in order for the more aggressive rate cut scenarios to pan out.

the CL Team Jobless claims week by week chart

The only other major report this week was the Services Purchasing Managers Index (PMI) from S&P Global. A PMI measures economic output with a reading over 50 generally indicating expansion.  This month's came out at 55.2 which was just a hair higher than last month's and near the top of the recent range.

The CL Team S&P services PMI chart

In the coming weeks (and especially in the first two weeks of September), we'll get even more economic data with the power to refine rate cut prospects.   Just keep in mind that the Fed's rate cut would merely be the confirmation of what the rest of the rate market is already doing.  In other words, mortgage rates and Treasuries have already priced in a rate cut.  Now the data needs to avoid saying anything too glorious about the economy if the presently low rates are to stick around.

Additional improvements in rate would have to come from deterioration in the economic outlook, but there too, that's something that mortgage rates could price in well before the Fed meeting.

Share this post
Each year, the Federal Reserve meets in Jackson Hole with central bankers and academics to discuss monetary policy. Fed Chair speeches here often impact financial markets and interest rates.
https://clteam.us/post/powell-puts-a-lid-on-the-rate-debate-but-wheres-the-bottom

Discover more articles.

Stay informed with more of our informative blog posts.

Spring Surge: Why Homebuyers Are Still Making Moves Even with High Rates

Spring Surge: Why Homebuyers Are Still Making Moves Even with High Rates

Buyers aren’t waiting for rates to drop—they’re making moves this spring. See why demand is rising, what’s impacting affordability, and how The CL Team is helping clients win in today’s market.
Read more
Some Uncertainty at The End of an Otherwise Decent Week

Some Uncertainty at The End of an Otherwise Decent Week

Markets wobbled to close an otherwise stable week. While weak retail data helped rates early on, a late-day credit downgrade and inflation concerns added fresh uncertainty heading into next week.
Read more
Why Buyers Are More Likely To Get Concessions Right Now

Why Buyers Are More Likely To Get Concessions Right Now

Buyers are gaining ground. With more inventory, builders and sellers are offering incentives like rate buy-downs, price cuts, and paid closing costs to help sweeten the deal.
Read more
View All
This is a Loan Production Office of Luminate Bank®
400 Executive Center Dr., Suite #108, Greenville, SC 29615

(864) 569-0741
origination@clteam.us

Hours: Monday to Friday 9am to 5pm
Our Company
HomeMeet The TeamReviewsContact Us
Resources
CL Team BlogFirst-Time HomebuyersMortgage CalculatorsApply Now
Social Media
LinkedIn
Facebook
Instagram

Caleb LeGrand NMLS 259691

Luminate Bank NMLS 1281698 Bank Headquarters 2523 S. Wayzata Blvd., Suite 100 Minneapolis, MN 55405 (952) 939-7200. This is not an offer to enter into an agreement. Information provided is outlining the minimum down payment requirements as allowed by specific loan program and product guidelines and any information, rates and programs are subject to change without prior notice and may not be available in all states. All loans are subject to credit and property approval. Luminate Bank is not affiliated with any government agency. All rights reserved. Member FDIC. Equal Housing Opportunity Lender.

Copyright © 2023-2022 CL Team at Luminate Bank. Made by Semmodo
Privacy PolicyCompany LicensesNMLS Consumer AccessAccessibility