If you paid attention to the Federal Reserve's monetary decisions last year, you might have been surprised by something: The central bank's three interest rate cuts didn't help mortgage rates get cheaper for homebuyers.

Consumers and traders are waiting to learn if the Fed’s pause is a one-meeting hold or the start of a longer stretch.

It's important to understand that the Fed's decision to pause rate cuts will not directly impact mortgage rates. Mortgage rates are actually driven by a range of factors, including the Fed's rate changes. This week's Fed rate decision does, however, have a big influence on where mortgage rates could head.

The central bank’s decision to pause at its first meeting of 2025 followed a series of cuts that began in September to account for progress already made on getting inflation down. Over the course of three meetings, the Fed lowered rates by a full percentage point to a range of 4.25 percent to 4.5 percent, which was maintained on Wednesday.

The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump’s second term.

A rate pause means there's still time to score a high annual percentage yield, or APY, on a CD. Banks tend to follow the Fed's lead when setting CD rates, so we're likely to see APYs hold steady for the time being.

The Federal Reserve left interest rates unchanged on January 29, and an interest rate cut is unlikely when the Fed issues its next policy decision on March 19, 2025.