Interest Rates to Remain Steady, Despite Trump’s Demands
The Federal Reserve is expected to maintain interest rates at its upcoming meeting, despite President Trump’s calls for an immediate drop. This decision comes after a series of rate hikes between 2022 and 2023 aimed at combating inflation, which remains above the Fed’s 2% target.
Consumers Face Little Relief
For individuals struggling with high prices and borrowing costs, there is little respite in sight. “Anyone hoping for the Fed to rescue them from high interest rates soon will be disappointed,” warns Matt Schulz, LendingTree’s chief credit analyst.
How Interest Rates Affect Consumers
The Federal funds rate, set by the Fed, influences borrowing and savings rates. When the Fed funds rate eventually decreases, consumers may see lower borrowing costs across various loans, including mortgages, car loans, and credit cards.
Credit Card Rates Remain Elevated
Despite the Fed’s rate cut last year, credit card costs remain high. The average credit card rate is over 20%, near an all-time high. Card issuers are often slow to respond to Fed rate decreases, and delinquencies are on the rise.
Mortgage Rates Rise Despite Fed Cuts
Mortgage rates have increased in recent months, even as the Fed cut rates. Since most people have fixed-rate mortgages, their rate won’t change unless they refinance or sell their current home.
Auto Loan Rates and Affordability
Auto loan rates are fixed, and outstanding balances have surpassed $1.64 trillion. The average rate on a five-year new car loan is around 7.47%. With the Fed signaling gradual rate cuts, affordability challenges are likely to persist for new vehicle buyers.
Student Loan Rates and Affordability
Federal student loan rates are fixed, so most borrowers aren’t immediately affected by Fed moves. However, undergraduate students who took out direct federal student loans for the 2024-25 academic year are paying 6.53%, up from 5.50% in 2023-24.
Savers Benefit from High Yields
While the central bank has no direct influence on deposit rates, top-yielding online savings accounts have offered the best returns in over a decade, paying nearly 5%. Savers can enjoy these inflation-beating yields for some time to come.
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