Author: Eric BernsteinPublished:
The Fed held rates steady for the third consecutive meeting at 3.5%–3.75%, Powell gave his final press conference as chair, and the inflation data that came out after the meeting gave the Fed very little reason to change course anytime soon. This week all eyes shift to the jobs market, with Friday's April employment report as the number that could move rates heading into the first Fed meeting under new leadership in June.
The average rate on a 30-year fixed rate conventional loan ticked up slightly to 6.31%, up from 6.24%. See what rates we're offering by signing up for our Friday rate texts.
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The Fed, Powell, and What It All Means for Your Mortgage Rate
At its April 2026 meeting, the Fed held rates steady at 3.5%–3.75% for the third consecutive time, with the most divided vote since 1992 — splitting 8-4 as officials fought over whether to even keep the door open for future cuts. The holdout came down to persistent inflation driven largely by energy prices from the conflict in the Middle East, which has kept the Fed from moving in either direction. What made the dissent especially notable is that it was pulling in two directions at once. Governor Stephen Miran voted in favor of a quarter point cut, as he has done at every meeting since joining the Fed in September 2025. On the other side, regional bank presidents Beth Hammack, Neel Kashkari, and Lorie Logan agreed with holding rates steady but opposed the inclusion of any language in the policy statement that would signal cuts are coming. One official pushing to move faster, three others not even wanting to hint at it — that split tells you everything about how uncertain the path forward really is.
The other major development is the leadership transition at the Fed. Powell's term as chair ends May 15, and Kevin Warsh is moving through Senate confirmation to replace him. Powell confirmed he's staying on as a governor until an investigation into the Fed's building renovations is fully resolved — which means Trump doesn't get an additional board appointment, and Warsh's ability to shift policy quickly is more limited than markets may have expected. Warsh has said publicly that rates can come down, but he's also been clear that he won't cut at the expense of price stability.
For mortgage rates, the picture is one of patience. Rates have moved between the low and mid 6s — dropping to 6.03% in January before jumping to 6.46% in April when the Iran conflict rattled bond markets, and settling back to 6.23% most recently. With the Fed widely expected to hold through the rest of 2026, and inflation still elevated from energy prices and tariffs, meaningful rate relief isn't likely to arrive quickly. The June meeting — the first under Warsh's leadership — will be the one to watch for any signal on where policy goes next.
PCE Tops Expectations
The Fed's preferred inflation gauge, core PCE, came in at 3.2% for March, its highest level since November 2023. Include food and energy and the headline number jumps to 3.5%, driven almost entirely by an 11.6% surge in energy costs tied to the Iran conflict. Chicago Fed President Austan Goolsbee didn't mince words, calling the data "bad news" and noting that inflation is now rising even in service industries that should be largely insulated from oil prices and tariffs. That's the part that concerns the Fed most. When price pressures start spreading beyond the obvious culprits, it becomes harder to look past them. and, more importantly for homebuyers and homeowners, harder to cut rates.
Here's where it gets interesting for anyone watching what comes next. The current Fed measures inflation using core PCE, which strips out food and energy. Incoming Fed Chair Warsh wants to change that and use what's called a "trimmed mean", essentially removing the most extreme price swings on both ends and asking whether inflation is broadly and persistently rising across the economy. Under that method, inflation today looks softer, running closer to 2.3%–2.8% rather than 3%. That's a reading that would give a new Fed chair more room to justify rate cuts. The catch, as Bank of America pointed out, is that trimmed inflation has actually run higher than core PCE in past periods, which could tie Warsh's hands if that happens again — he'd have to stick with his preferred measure even if it argued against cutting. It's a framework that works in his favor right now, but it's not a guaranteed path to lower rates.
What to expect this week?
This week is one of the more important ones we've seen in a while for mortgage rates. With a new Fed chair coming in and inflation data still running hot, every data point has the potential to move rates.
Tuesday kicks things off with job openings and new home sales data, giving us an early read on whether labor demand continues to cool and whether the housing market is showing any signs of life.
Wednesday brings ADP employment alongside speeches from St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee. Markets will be watching both closely for any signal on where policy is heading under new leadership.
Thursday brings initial jobless claims and U.S. productivity data, plus speeches from Kashkari and Hammack — two of the three officials who dissented against the easing bias at last week's meeting. What they say could move rates on its own.
Friday is the main event. The April jobs report comes in with expectations for 53,000 jobs added and unemployment holding at 4.3%. Hourly wages, consumer sentiment, and a panel featuring Goolsbee, Bowman, and Waller round out what will be a very busy morning for rates. A miss to the downside keeps downward pressure on rates intact. A stronger number complicates the picture heading into June.
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