Iran-U.S. war seems to be having a deep impact on the U.S. Fed interest rate cut. Before the start of the war, most analysts had penciled in at least two rate cuts by the US Federal Reserve before the end of the year. As of Monday, there are now no rate cuts expected in 2026, according to CME's FedWatch tool.
BofA Global Research and Goldman Sachs are the latest brokerages to revise their U.S. Federal Reserve rate calls to later dates, citing elevated inflation due to high energy prices and growing strength in the labor market. BofA Global Research now expects the Fed to remain on hold for the rest of this year, with two 25bp cuts in July and September 2027, while Goldman Sachs sees cuts in December 2026 and March 2027 compared to its earlier forecast of a first rate cut in September 2026.
A host of global brokerages have recast their projections for U.S. rate cuts in 2026, split between some easing and no cuts at all, as the 10-week-old Middle East war has pushed energy prices higher and left policymakers cautious about inflation risks.
Data on Friday showed U.S. employment increased more than expected in April and the unemployment rate held steady at 4.3%, reinforcing expectations that the central bank would leave interest rates unchanged for some time.
Analysts at Goldman Sachs wrote that "if the labor market does not weaken sufficiently this year, we would instead expect the FOMC to deliver two final cuts in 2027," in a note dated May 8.
The Fed held rates steady at its April 29 meeting in an unusually divisive 8–4 vote, the closest since 1992. U.S. inflation remains well above the Fed's 2 per cent target. Traders expect the central bank to hold interest rates steady in the 3.50 per cent to 3.75 per cent range until the end of the year.
30-year Fixed-Rate Mortgage Rate
Sales of previously owned US homes in April posted a modest 0.2 percent increase compared to the previous month, data released on Monday showed, with economists not expecting lower mortgage rates in the near-term. Just over four million homes and apartments changed hands during the month on an annualized basis, according to the National Association of Realtors (NAR), showing no change year-over-year and coming in below expectations.
Economists polled by Dow Jones Newswires and the Wall Street Journal predicted the figure would register at 4.1 million units. The median selling price in April rose 0.9 percent from a year ago to $417,700, with limited inventory a key factor.
Mortgage rates have risen since the launch of the US-Israel war on Iran, with the average 30-year fixed-rate mortgage rate coming in at 6.37 percent on May 7, according to the government-sponsored Freddie Mac agency.
Rates had fallen just below the symbolic six-percent threshold at the end of February, just before the war began. The war has engulfed the Middle East in violence, with Iranian retaliatory attacks targeting US allies in the Gulf and Israel attacking Lebanon.
Iran's nearly complete closure of the strategic Strait of Hormuz has sent energy prices skyrocketing, fuelling global inflation and trimming economic growth forecasts.
BofA Global Research and Goldman Sachs are the latest brokerages to revise their U.S. Federal Reserve rate calls to later dates, citing elevated inflation due to high energy prices and growing strength in the labor market. BofA Global Research now expects the Fed to remain on hold for the rest of this year, with two 25bp cuts in July and September 2027, while Goldman Sachs sees cuts in December 2026 and March 2027 compared to its earlier forecast of a first rate cut in September 2026.
A host of global brokerages have recast their projections for U.S. rate cuts in 2026, split between some easing and no cuts at all, as the 10-week-old Middle East war has pushed energy prices higher and left policymakers cautious about inflation risks.
Data on Friday showed U.S. employment increased more than expected in April and the unemployment rate held steady at 4.3%, reinforcing expectations that the central bank would leave interest rates unchanged for some time.
Analysts at Goldman Sachs wrote that "if the labor market does not weaken sufficiently this year, we would instead expect the FOMC to deliver two final cuts in 2027," in a note dated May 8.
The Fed held rates steady at its April 29 meeting in an unusually divisive 8–4 vote, the closest since 1992. U.S. inflation remains well above the Fed's 2 per cent target. Traders expect the central bank to hold interest rates steady in the 3.50 per cent to 3.75 per cent range until the end of the year.
30-year Fixed-Rate Mortgage Rate
Sales of previously owned US homes in April posted a modest 0.2 percent increase compared to the previous month, data released on Monday showed, with economists not expecting lower mortgage rates in the near-term. Just over four million homes and apartments changed hands during the month on an annualized basis, according to the National Association of Realtors (NAR), showing no change year-over-year and coming in below expectations.
Economists polled by Dow Jones Newswires and the Wall Street Journal predicted the figure would register at 4.1 million units. The median selling price in April rose 0.9 percent from a year ago to $417,700, with limited inventory a key factor.
Mortgage rates have risen since the launch of the US-Israel war on Iran, with the average 30-year fixed-rate mortgage rate coming in at 6.37 percent on May 7, according to the government-sponsored Freddie Mac agency.
Rates had fallen just below the symbolic six-percent threshold at the end of February, just before the war began. The war has engulfed the Middle East in violence, with Iranian retaliatory attacks targeting US allies in the Gulf and Israel attacking Lebanon.
Iran's nearly complete closure of the strategic Strait of Hormuz has sent energy prices skyrocketing, fuelling global inflation and trimming economic growth forecasts.
