{"id":14900,"date":"2025-05-10T10:26:13","date_gmt":"2025-05-10T10:26:13","guid":{"rendered":"https:\/\/finderica.com\/?p=14900"},"modified":"2025-05-10T10:26:13","modified_gmt":"2025-05-10T10:26:13","slug":"how-holding-rates-steady-affects-you","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=14900","title":{"rendered":"How holding rates steady affects you"},"content":{"rendered":"
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On the heels of a stronger-than-expected jobs report and elevated inflation readings, the\u00a0Federal Reserve\u00a0is expected to hold\u00a0interest rates\u00a0steady at the end of its two-day meeting this week \u2014 despite pressure from President Donald Trump.<\/p>\n

“Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!” Trump said in a Truth Social post Friday.<\/p>\n

As an independent agency, the central bank has always operated autonomously from the White House. Federal Reserve Chair Jerome Powell has repeatedly said that monetary policy decisions are completely separate from politics.\u00a0At the same time, the president’s new trade policies are a barrier to cutting rates, in part because economists expect the new tariffs could lead to a widespread rise in prices that\u00a0complicate inflation forecasts.<\/p>\n

To be sure, many Americans are getting squeezed by high prices and high\u00a0borrowing costs,\u00a0while the potential inflation impacts from a costly trade war weigh heavily on household budgets.<\/p>\n

“Consumers are always the ones who pay the price,” said Eugenio Aleman,\u00a0chief economist at Raymond James.<\/p>\n

More from Personal Finance:<\/strong>
What experts say about selling gold jewelry for cash
What typically happens to stocks after periods of high volatility
Why tariffs will hurt low income Americans more than rich<\/p>\n

The federal funds rate sets what banks charge each other for overnight lending, but also\u00a0affects many of the borrowing and savings rates\u00a0consumers see every day.<\/p>\n

“Uncertainty rules amid a trade war and the ever-changing landscape of tariffs,” said Greg McBride, Bankrate’s chief financial analyst. “But with the hard data on consumer spending and employment still hanging in there, the Fed will remain firmly planted on the sidelines.”<\/p>\n

Markets now widely expect the Fed to wait to cut rates until July,\u00a0with two or three more reductions to follow by the end of the year.<\/p>\n

Once the federal funds rate comes down, borrowing costs\u00a0could decrease across a variety of consumer debt, such as auto loans, credit cards and mortgage rates, making it easier to access cheaper money.\u00a0<\/p>\n

Here’s a breakdown of how it works.<\/p>\n<\/div>\n

<\/a>Credit cards<\/h2>\n
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Most\u00a0credit cards\u00a0have a variable rate, so there’s a direct connection to the Fed’s benchmark.<\/p>\n

For the most part, the\u00a0average annual percentage rate has hovered just over 20% this year, according to Bankrate, not far from last year’s all-time high<\/a>.\u00a0<\/p>\n

The Fed holding steady isn’t the only thing keeping credit card rates high. “Banks are nervous about all of the uncertainty in the economy and what it means for consumers,” said Matt Schulz, chief credit analyst at LendingTree.<\/p>\n

“When that happens, banks try to minimize risk as much as possible, and one of the ways they do that is to raise interest rates on credit cards,” he said.<\/p>\n<\/div>\n

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Credit card debt continues to be a pain point for consumers struggling to keep up with high prices. Total credit card debt and average balances are also at\u00a0record highs.<\/p>\n<\/div>\n

<\/a>Mortgages<\/h2>\n
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Although 15- and 30-year mortgage rates are largely tied to Treasury yields and the economy, concerns about the direction of the economic policy and Trump’s tariff plans have been a drag on rates, according to the Mortgage Bankers Association<\/a>.<\/p>\n

The average rate for a 30-year, fixed-rate mortgage is\u00a0now 6.81%, down from 7.04% at the beginning of the year, according to Bankrate. But for potential home buyers, that’s not enough of a decline to give the housing market a boost.<\/p>\n

“Unfortunately for those shopping for a home this summer, rates are likely to stay in or around that range in the near future,” Schulz said.<\/p>\n<\/div>\n

<\/a>Auto loans<\/h2>\n
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Although auto loan rates\u00a0have seen little change, car payments have gone up because\u00a0prices\u00a0are rising, while Trump’s 25% tariffs of imported vehicles adds more pressure.<\/p>\n

Currently, the average rate on a five-year new car loan is 7.33%, down from 7.53% in January, according to Bankrate.<\/p>\n<\/div>\n

<\/a>Student loans<\/h2>\n
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Federal student loan rates\u00a0are fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.<\/p>\n

Interest rates for the upcoming school year will be based in part on the May auction of the\u00a010-year Treasury note and aren’t likely to change much. Undergraduate students who took out direct federal student loans for the 2024-25 academic year are paying\u00a06.53%, up from 5.50% in 2023-24.<\/p>\n

Although borrowers with existing federal student debt\u00a0balances won’t see their rates change, many are now facing other headwinds and fewer\u00a0federal loan forgiveness\u00a0options.<\/p>\n<\/div>\n

<\/a>Savings<\/h2>\n
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On the upside, top-yielding online\u00a0savings\u00a0accounts still offer above-average returns and currently pay as much as 4.5%, according to Bankrate. While the central bank has no\u00a0direct influence\u00a0on deposit rates, the yields tend to be correlated to changes in the target federal funds rate \u2014 so holding that rate unchanged has kept savings rates elevated, for now.<\/p>\n

“For consumers, oftentimes the best way to protect your finances in times of uncertainty is to double-down on boosting emergency savings and eliminating high interest rate debt,” said Bankrate’s McBride. “This builds a buffer in the event of an income disruption or unanticipated expenses and insulates you from costly borrowing.”<\/p>\n

Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On the heels of a stronger-than-expected jobs report and elevated inflation readings, the\u00a0Federal Reserve\u00a0is expected to hold\u00a0interest rates\u00a0steady at the end of its two-day meeting this week \u2014 despite pressure from President Donald Trump. “Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!” Trump said<\/p>\n","protected":false},"author":1,"featured_media":14901,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[843,1921,261,4863],"class_list":{"0":"post-14900","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-affects","9":"tag-holding","10":"tag-rates","11":"tag-steady"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14900"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14900\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/14901"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}