On January 11, 2026, Federal Reserve Chair Jerome Powell issued a rare public statement about political pressure on the Federal Reserve and the importance of maintaining the institution’s independence while setting monetary policy.
You can read the full text in the Federal Reserve’s official release from the Federal Reserve Board.
Powell’s comments followed legal actions by the U.S. Department of Justice involving the Federal Reserve, which Powell described as politically motivated rather than rooted in legitimate legal concerns. NPR covered the escalation in DOJ Subpoenas the Federal Reserve in an Escalating Pressure Campaign.
While this may sound like a political dispute, it has real consequences for financial markets and for mortgage rates in 2026.
Why Powell’s Statement Matters for Mortgage Rates
Powell made it clear that the Federal Reserve will continue setting interest rates based on inflation, employment, and economic data, not political pressure. This matters because when investors trust the Fed to act independently, financial markets tend to be more stable. Stable markets lead to more predictable long-term interest rates, including mortgage rates.
The Federal Reserve explains how interest rate policy affects borrowing costs in Monetary Policy and the Economy.
Mortgage rates are closely tied to long-term bond markets, especially the 10-year Treasury yield. Reuters reported that Powell’s statement raised concerns about political interference and its potential impact on financial markets in U.S. Federal Reserve Coverage.
What This Means for Mortgage Rates in 2026
Mortgage rates are unlikely to fall sharply.
Even if the Federal Reserve cuts its benchmark interest rate this year, mortgage rates do not drop in lockstep. They are driven by long-term bond yields and investor expectations about inflation and economic growth. Most forecasts point to a gradual easing rather than a dramatic drop.
According to Freddie Mac’s Primary Mortgage Market Survey, average 30-year fixed mortgage rates in early 2026 have been hovering in the low six percent range.
Any rate cuts are likely to be gradual.
Powell’s January statement reinforces that the Fed will not rush into aggressive rate cuts unless inflation and the labor market clearly weaken. That means mortgage rates may improve over time, but sudden large drops are unlikely.
Market volatility could keep rates elevated.
Political and legal pressure on the Federal Reserve can create uncertainty in bond markets. Since mortgage rates track long-term Treasury yields, that uncertainty can keep borrowing costs higher than buyers might hope.
What This Means for Homebuyers and Homeowners in 2026
If you are buying a home this year, it may not make sense to wait for a big rate drop. Small changes in mortgage rates can help, but home prices, inventory, and competition also play a major role.
If you are considering refinancing, even a modest rate decline later in 2026 could still reduce your monthly payment, especially if you bought or refinanced when rates were higher.
If you are planning your finances for the year ahead, expect mortgage rates to remain in a moderate range rather than returning to the ultra-low levels of the early 2020s.
Bottom Line
Jerome Powell’s January 11, 2026 statement confirms that the Federal Reserve will continue setting interest rates based on economic conditions rather than political pressure. That approach tends to produce gradual changes in interest rates, not sudden shifts. For mortgage borrowers in 2026, this means rates are more likely to move slowly and steadily rather than falling quickly.
Have Questions About Mortgage Rates or Buying in 2026?
If you want to understand what these trends mean for your buying power, refinancing options, or timing in the Chicago market, reach out to Camille Canales.
Call Camille at 773.232.5282
Email [email protected]
Let’s talk through your goals and build a smart mortgage and home buying strategy for 2026.
