When the Fed cuts interest rates, people expect mortgage rates to also go down. But in 2024, the opposite happened.

In the U.S., it’s partly due to expectations of a stronger, more inflationary future economy with bigger budget deficits.

Goldman Sachs, JPMorgan and other prominent names beat earnings forecasts. The Federal Reserve and volatile markets are giving them a boost.

They’re starting 2025 at the highest they’ve been since last summer.

The December rate cut was expected. But the Fed also reduced the number of expected rate cuts for 2025.

“We’re closer to the neutral rate, which is another reason to be cautious about further moves,” said Fed Chair Jerome Powell.

Carola Binder, an economist at the University of Texas at Austin, explains why tariffs might cause prices to rise, but they doesn’t necessarily mean the Fed will get involved right off the bat.

The Federal Reserve may take note of whether businesses anticipate having to pay higher wages or raise prices under the next administration.

On Thursday, Fed Chair Jerome Powell wouldn’t rule out an interest rate hike next year, though that’s not the plan at this point.

The rate cut follows a larger half-point reduction in September.