The Fed meets tomorrow, and we’re almost certainly getting another ¼% rate cut. Prediction markets are putting the odds around 90%, so the cut itself likely won’t move mortgage rates much.

Because of the government shutdown, there were no official jobs reports for October or November. The delayed jobs report will finally come out on 12/16, and the delayed inflation (CPI) report will come out on 12/18. These will be the first real data points the Fed gets since the shutdown so they’re pretty important.

You might be wondering: Why is the Fed voting on a rate cut when they don’t even have the newest jobs and inflation data? Can’t they just postpone their meeting until after they receive this crucial information? Great question! Your guess is as good as mine!

There’s also a bigger storyline: Kevin Hassett is viewed as the frontrunner to become the next Fed Chair. He’s seen as more growth-focused and generally supportive of looser policy, which could be rate-friendly in 2026.

But here’s the other side:

If markets think the Fed is cutting no matter what—even without the data to justify it—long-term rates can actually go higher. Investors demand more yield when they feel the Fed isn’t taking inflation seriously.

Trump said he expects to name the next Fed Chair this month, so Powell will basically be a lame duck until his term ends in May. Whoever gets the nod will essentially be “shadow chair” for the next few months. Ideally that person helps steady markets rather than add uncertainty.

The next Fed meeting is in January. Right now, markets are pricing in two more cuts for 2026, so a January cut looks unlikely at this point.

Recap:

-Likely to see a .25% rate cut tomorrow

-Trump to name a new Fed chair this month, Kevin Hassett is the frontrunner

-Markets are estimating two rate cuts next year.