Fed Pauses Rate Cuts, Holds Steady

The Federal Open Market Committee has voted to hold interest rates steady at a target rate of 3.50 to 3.75 percent after cutting rates three times in a row toward the end of 2025.

The move comes as the Fed faces a number of challenges to its independence, including attempts to remove Lisa Cook from the Federal Reserve Board of Governors, and a criminal investigation into Federal Reserve Chair Jerome Powell, whose term ends in May.

In a press conference following the committee’s decision, Powell did not give much of an outlook for the rest of 2026 or directly predict further cuts.

“Monetary policy is not on a preset course, and we will make our decisions on a meeting-by-meeting basis,” Powell said. He added that “the economy is growing at a solid pace, the unemployment rate has been broadly stable and inflation remains somewhat elevated.”

Powell also declined to expand on his response to the Department of Justice investigation, instead referring to his previous video statement.

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Two Fed Governors, Stephen Miran and Christopher Walker, voted against the decision to hold rates steady, preferring to cut rates by 25 basis points.

The FOMC’s decision to hold rates steady came as no surprise to the commercial real estate industry, which had largely been expecting the outcome. Pete O’Neil, national director of research at Northmarq, noted that the Fed’s action was in line with its recent moves.

“This (follows) a similar pattern to what we saw at the end of 2024 and the beginning of 2025, with consecutive cuts late in the year followed by periods of no action,” he said. “The Fed’s dual mandate focuses on labor markets and inflation, and both ended 2025 in relatively healthy shape.”

What it means for CRE

While it might be tempting to wish for a rate cut, several industry executives who spoke to Commercial Property Executive said that holding rates steady might actually be what’s best for commercial real estate right now because it offers stability.

“Stability gives buyers, sellers and lenders more confidence to move forward instead of staying on the sidelines,” Karine Aslanian, a broker associate & commercial advisor at The Agency, told CPE before the FOMC’s meeting.

However, over the long term, the industry will continue to hope for at least a few more rate cuts this year in order to reduce financing burdens and boost transaction activity, especially for the office sector, where investors are especially wary of higher rates and risk.

“Deals that would not pencil with rates in the mid-to-high sixes might work if rates continue to decline and reach the low fives or below,” said Scott Hensley, principal & broker at Piedmont Properties/CORFAC International.