On January 29, 2025, the Federal Open Market Committee paused its recent spate of interest rate cuts, leaving the overnight borrowing rate at 4.25%-4.5%. The move comes after three consecutive rate cuts in the final months of 2024. With stubborn inflation not yet at the Federal Reserve's target of 2% and unemployment stabilizing, markets had predicted the Fed would pause cuts at this time.
Analysts still expect that the FOMC is likely to cut rates again this year, although it may be several months if that happens—and of course, there is no guarantee that it will happen at all. However, for investors, the pause offers an opportunity to plan for investments that may benefit from an eventual resumption of rate cuts. In this light, real estate investment trusts (REITs) are particularly attractive.
