As a long time Total Commander user, I rely heavily on opening cmd.exe/powershell.exe/pwsh.exe/bash in the currently selected directory. So I was a bit annoyed when i found out that the new Windows Terminal, wt.exe, by default opens in your home directory.

It turns out to be a regression. For now, the workaround is to add

"startingDirectory": null

to the default profile in settings.json (Windows Terminal -> dropdown -> Settings), e.g.

 
{
	// Make changes here to the powershell.exe profile
	"startingDirectory": null,
	"guid": "{61c54bbd-c2c6-5271-96e7-009a87ff44bf}",
	(...)
}