Fed Delays Rate Cuts Again, Promises to Pivot "Right After the Next Meeting, We Swear This Time"


Bank of America Now Projects Relief in the Second Half of 2027, Which Is a Year That Has Not Happened Yet and Is Already Disappointing


The Federal Reserve held interest rates steady at its April meeting, keeping the federal funds rate at 3.50%–3.75%, and the nation's financial institutions spent the following two weeks doing what they do best when bad news arrives: issuing research notes. Bank of America said Friday that it no longer expects the Fed to cut rates at all in 2026 and has moved its projection to the second half of 2027. Goldman Sachs pushed its forecast for the first cut back to December 2026. A Reuters poll of 103 economists found that 56 of them expect rates to remain unchanged through September. Jerome Powell, in what may have been his final meeting before being succeeded by Trump nominee Kevin Warsh, said essentially nothing that would comfort anyone with a mortgage, a car loan, a credit card, or a functioning understanding of how interest rates affect the cost of existing.

This is not a surprise. This is what the Fed does when it is caught between two bad options and needs to describe doing nothing as a strategy. "Wait-and-see posture" is the technical term. "Nimble in adjusting the stance of policy in response to incoming data" is the phrase in the actual FOMC minutes. The data, currently, includes: war-driven energy price spikes, tariff-driven goods inflation, a labor market that keeps adding jobs at a pace that prevents the Fed from claiming the economy is slowing, and an AI-driven productivity story that no one has figured out how to model yet. Into this situation steps the Fed with a 3.50% rate and a calendar it keeps revising.


Why It's Worse Than the Number Suggests


The Iran war alone has driven oil prices up more than 76% from late February to early April, according to a Reuters poll of economists. The Strait of Hormuz handles roughly 20% of global oil trade. When 20% of global oil trade becomes uncertain, oil does not get cheaper. When oil gets more expensive, everything that is made, grown, shipped, refrigerated, or moved by a vehicle gets more expensive. When everything gets more expensive, the Fed cannot cut rates without appearing to endorse the expensiveness. So the Fed holds. And the expensiveness continues. And the homebuyer who was waiting for rates to come down waits another quarter, and the quarter after that, and eventually is told to check back in the second half of 2027.

The Federal Reserve Bank of Cleveland's inflation nowcast has been tracking a notable uptick in inflation readings from February to April 2026. The Fed's preferred inflation measure, core PCE, is running at approximately 3% — a full percentage point above the Fed's 2% target. Goldman Sachs noted that energy cost passthrough is likely to keep it near 3% through the year. "The conditions needed for policy easing" — which is how the Fed describes the circumstances under which they would stop making your mortgage payment expensive — are not currently present and are not expected to be present soon.


What Kevin Warsh Might or Might Not Do


Trump has nominated Kevin Warsh, a former Fed governor, to succeed Jerome Powell as Fed chairman. Bank of America had previously expected Warsh to steer toward easier monetary policy, which is why they had initially penciled in two cuts for 2026. That expectation has been revised. The "shifting economic backdrop" — which includes an ongoing war, global supply disruptions, tariff uncertainty, and an AI productivity boom that is simultaneously lowering some costs and raising others — has made forecasting the Fed's path about as reliable as forecasting the next Dukono eruption. Technically possible. Chronologically imprecise. Costly to be wrong about.

As comedian Lewis Black would note about the rate situation: there's a special kind of suffering reserved for people who did everything right. They saved the down payment. They waited. They checked the rates. They waited more. And now Bank of America is telling them to check back in 2027, at which point the problem will probably be something else entirely, and there will be a new reason the timing isn't right, and the rates will still be 3.5%, and Jerome Powell — or Kevin Warsh, or whoever is in the chair by then — will describe the posture as "nimble."


The Consumer in the Crossfire


The practical effects for ordinary Americans: mortgage rates remain elevated, keeping would-be buyers locked out of or priced out of the housing market. Credit card rates, which are tied to the prime rate, remain punishing. Auto loan rates remain high. The cost of carrying any variable-rate debt continues to compound. The Federal Reserve's own consumer credit data shows American households carrying over $1 trillion in revolving credit card debt. At current rates, the interest on that debt is a number that should be its own news cycle but instead functions as background noise to the geopolitical story that caused it.

The Fed meets again soon. The minutes will reference incoming data and nimble postures and adjusted stances. The rate will hold. The note from Bank of America will be updated. And somewhere in America, a person who just wanted to buy a reasonably priced house is refreshing a mortgage calculator and watching the number not change.

Auf Wiedersehen, amigo!

The Federal Reserve held its benchmark interest rate at 3.50%–3.75% at its April 2026 meeting, citing inflation uncertainty driven partly by the Iran war and energy price shocks. Bank of America subsequently projected no rate cuts in 2026 and moved its forecast to the second half of 2027. Goldman Sachs pushed its cut expectation to December 2026. Core PCE inflation is running at approximately 3%, above the Fed's 2% target. Trump has nominated Kevin Warsh to succeed Jerome Powell as Fed chairman. This is American satirical journalism. The rate is real. The nimbleness is what the Fed calls it. Your mortgage payment does not care what the Fed calls it. https://bohiney.com/fed-delays-rate-cuts-again/