The Federal Reserve continues to dominate financial headlines, and Minneapolis Fed President Neel Kashkari is the latest to weigh in. He believes 2025 Fed rate cuts may still be needed as the job market shows signs of stress and inflation pressures remain. For Florida buyers and homeowners, the question is simple: how will these cuts affect mortgage rates and affordability?

Why 2025 Fed Rate Cuts Are Back on the Table

Kashkari pointed to weakening labor market data. In August, unemployment rose to 4.3%, the highest since 2021, with hiring slowing sharply. He noted that when labor markets turn down, they can do so quickly and without much warning. To him, that risk justifies additional action from the Fed.

While he does not hold a voting seat on the Federal Open Market Committee (FOMC) this year, Kashkari still shapes policy discussions. His latest outlook now supports three total cuts in 2025—one more than he anticipated earlier.

Inflation, Tariffs, and the Neutral Rate

Another key issue is inflation. Kashkari doesn’t see it moving far above 3% in the near term, unless tariffs rise or a new supply shock emerges. He highlighted that imports are a relatively small share of U.S. consumption, which limits tariff impact.

At the same time, Kashkari revised his estimate of the “neutral rate” of interest to 3.1%. This rate reflects a balance—neither stimulating nor restraining the economy. He warned that even with more 2025 Fed rate cuts, long-term interest rates may not fall significantly. That could mean only modest relief for borrowers in the housing market.

Fed Independence and Political Pressure

Beyond rates and inflation, Kashkari also addressed questions of Fed independence. Despite political noise, including pressure from the Trump administration and new Fed appointments, he stressed that financial markets still trust the Fed’s ability to control inflation. This trust is critical for keeping borrowing costs stable in the long run.

What This Means for Mortgage Rates

Here’s the reality: mortgage rates don’t automatically fall when the Fed cuts. They move with the bond market, especially the 10-year Treasury yield. Even if 2025 Fed rate cuts occur, rates in Jacksonville, St. Johns County, and across Florida may stay higher than many expect.

That makes it risky to “wait and see” if rates drop before buying or refinancing. Timing the market is difficult. What matters more is whether today’s rate saves you money and helps you meet your financial goals.

Should You Lock In Now or Wait?

If you’re on the fence about buying a home in Florida or refinancing, Kashkari’s comments offer a reminder: uncertainty is high. Rates could ease slightly with more Fed action, but they could also rebound if inflation ticks higher or the bond market reacts differently.

Our advice at North Star Mortgage Network is straightforward. If a rate today benefits you, don’t wait for a maybe. Get pre-approved, review your payment options, and move forward with confidence.

Florida Market Focus

Housing affordability remains tight in Northeast Florida. Even with some rate relief, rising insurance costs and property taxes continue to challenge buyers. This makes it even more important to partner with a mortgage broker who understands the local market and can shop across lenders for the best deal.

Key Takeaways

  • Kashkari supports up to three 2025 Fed rate cuts to protect the job market.
  • Inflation is expected to hold near 3%, limiting rate relief.
  • Mortgage rates follow bond yields, not Fed cuts directly.
  • Florida buyers should act on today’s opportunities instead of waiting.
Posted in blog