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Chances of Fed Interest Rate Cut Plunge After Strong Jobs Report
- Marc Winter
- Jul 11
- 2 min read
Source: realtor.com
The odds of a Fed rate cut in July took a nosedive after a strong June jobs report showed the U.S. added 147,000 jobs and unemployment dipped to 4.1%. Markets now see just a 5% chance of a cut at the Fed’s July meeting, down sharply from 24% the day before. The solid labor market weakens the case for lower rates anytime soon. For homebuyers, this means mortgage rates—already stuck above 6.6% since last December—aren’t expected to drop soon, keeping affordability a big challenge
"High interest rates and the lingering lock-in effect are still keeping many would-be buyers and sellers on the sidelines" says Realtor.com® Senior Economist Jake Krimmel. "For housing demand to meaningfully rebound, affordability must improve—through both a more balanced market and wage growth that keeps up with living costs"
The strong June jobs report strengthens Fed Chair Jerome Powell’s stance on a “wait-and-see” approach before cutting interest rates, despite mounting pressure from President Trump. Trump has repeatedly demanded Powell’s resignation, criticizing him for keeping rates steady since December and accusing him of ignoring the need for lower mortgage rates. Powell, however, insists the Fed’s decisions are based on its dual mandate of controlling inflation and maximizing employment, not political pressure. The clash highlights ongoing tensions as Trump pushes for quicker rate cuts to boost the economy, while Powell remains cautious amid inflation concerns.
Even if the Fed cuts rates at its July 29-30 meeting, mortgage rates might not budge much after June’s strong jobs report, says former Fed Vice Chair Roger Ferguson. He warns that a rate cut amid solid employment numbers could be ignored by markets—or even push long-term rates higher due to inflation fears. June’s report also revised job gains for April and May upward by 16,000, reinforcing the picture of a robust labor market. So, don’t expect a Fed rate cut to immediately ease borrowing costs just yet
Local government employment offsets DOGE cuts
The June employment report showed the largest job gains in state government (+47,000, mostly in education), local government education (+23,000), and health care (+39,000), with social assistance also rising by 19,000. Meanwhile, the federal government lost 7,000 jobs, continuing a decline of 69,000 since January. Other major sectors like construction, manufacturing, transportation, retail, and hospitality saw little change.
As we wrap up, the takeaway is clear: June’s unexpectedly strong jobs report—147,000 monthly additions and a dip in unemployment to 4.1%—has sharply weakened the case for a Fed rate cut in July, with CME’s FedWatch odds sliding from 24 % to around 5. For now, borrowers and homebuyers should brace for mortgage rates to stay stubbornly high, while policymakers hold steady. But keep an eye on inflation and labor trends this summer—if they soften, a rate cut could still materialize later in the year. Until then, it’s a waiting game—and one worth watching closely.
Stay tuned and stay savvy.
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