How Interest Rates Are Shifting in April 2025
Interest rates across various markets are constantly changing, and it’s important to understand what’s been happening.
Interest rates are crucial indicators for building a more comprehensive understanding of the current economic landscape.

And with the shifts projected for 2025, it’s essential to keep an eye on new regulations and emerging trends. Let’s break it down.
Overview
Interest rates remain high, with the Federal Reserve keeping the federal funds rate steady at 4.25%–4.50%.
Meanwhile, markets are still waiting for clearer signs of a potential slowdown in inflation before pricing in rate cuts.
Mortgage rates remain around 6.9% for 30-year fixed-rate loans, while the prime rate holds at 7.50%, directly impacting consumer credit lines and small business lending.
Yields on 10-year Treasury bonds are hovering around 4.29%, reflecting a strong investor focus on fixed-income assets amid economic uncertainty.
Despite some volatility, there’s general consensus that rates will likely remain elevated until there’s solid evidence that inflation is returning to the 2% target.
Current Economic Context
Federal Reserve Decision
At its latest meeting, the Federal Reserve opted to keep the federal funds rate within the 4.25% to 4.50% range, adopting a “wait and see” approach before making any adjustments.
This decision aligns with the Fed’s dual mandate of maintaining price stability and maximum employment—even as inflation figures continue to exceed the 2% target.
Fed Chair Jerome Powell emphasized that the U.S. economy remains in a strong position but acknowledged risks tied to import tariffs and slower growth momentum.
Macroeconomic Outlook
U.S. GDP contracted by 0.3% in the first quarter of 2025, largely due to frontloaded imports driven by tariffs and a modest slowdown in consumer spending.
The combination of slower growth and persistently high inflation creates a dilemma for the Fed: cutting too soon could reignite inflation, while maintaining high rates for too long could stall the economy further.
Key Interest Rate Trends
Federal Funds Rate
As of April 2025, the federal funds rate has remained at 4.25%–4.50% since March, following four hikes in 2024.
The next FOMC meeting is scheduled for May 7, when officials will assess whether there’s room for cuts based on updated economic data.
Prime Rate
The prime rate, which serves as the benchmark for many business loans and adjustable-rate mortgages, has held steady at 7.50% since mid-March.
This high level has made revolving credit more expensive for consumers and put added pressure on small businesses that rely on short-term credit lines.
Mortgage Rates
Average 30-year mortgage rates hovered around 6.89% at the end of April, marking a slight decline from recent highs.
Although rates have seen little fluctuation—within 20 basis points in recent weeks—the combination of high home prices and economic uncertainty continues to dampen demand.
Treasury Yields
Yields on U.S. Treasury bonds edged higher in April, with 2-year notes closing at 3.74% and 30-year bonds at 4.74% as of April 25.
The uptick reflects recalibrated inflation expectations and increased demand for safer returns, influencing long-term borrowing costs across the economy.
Impact on the Housing Market and Consumers
Mortgage Demand
The Mortgage Bankers Association reported a 4% drop in mortgage applications for home purchases—marking a two-month low.
Even though rates have slightly eased, elevated home prices and broader economic uncertainty have led many potential buyers to wait on the sidelines.
Refinancing activity also declined by 4% in April, though it remains 42% higher than the previous year—partly due to comparisons with much lower rates in prior years.
Short-Term Lending
With capital costs still elevated, short-term personal lending firms are facing increased regulatory pressure and declining demand.
In response, consumers are turning to peer-to-peer (P2P) lending platforms and fintechs offering more competitive rates, though often at the cost of higher credit risk.
Future Outlook
Rate Cut or Hold?
Analysts expect the Fed to begin cutting rates only in the second half of 2025—provided there are clear signs of cooling inflation and a weakening labor market.
If inflation remains above the 2% threshold, the “higher for longer” scenario will likely dominate, with possible rate adjustments deferred to late in the year.
Key Risk Factors
Trade tariffs and global market volatility remain top concerns for the Fed’s policy direction.
Additionally, geopolitical tensions and potential supply shocks in commodities could undo recent inflation control efforts, forcing the central bank to maintain a tighter stance for longer.