FOMC Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s commentary following the Federal Reserve’s FOMC statement released this afternoon on monetary policy and the economy:

---

"The FOMC met expectations with a 25-basis-point cut at its October meeting. The statement indicated that the Committee was more concerned about downside risks to the job market, although the last official data point was from August, hinting other data points showing further softening. Of note, there were two dissents to this rate cut decision, with Governor Miran preferring a 50-basis-point cut and Kansas City Fed president Schmid opting for no change in rates. MBA is forecasting another two 25-basis-point cuts to the federal funds target in December 2025 and then in the first quarter of 2026.

“The FOMC also announced that it would be ending quantitative tightening on December 1st, indicating that the overall balance sheet will no longer be shrinking. MBS prepayments and amortization will be rolled into Treasuries going forward.

“As these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result. Mortgage rates are currently around their low for the year and this has spurred both refinance and purchase activity.