The Fed Didn’t Budge on Interest Rates. Here’s Why That’s a Big Deal
Fed Pass to reduce interest rates At today’s meeting. It can be said that this is enough to explain no So far, the most interesting decision in 2025.
Nevertheless, in view of the decrease of the Federal Reserve in 2024, we hope to have a way to reduce the cost of lending. Last week, President Donald Trump said he would Require interest rate decline Immediately.
The Fed is currently in the holding model. The government’s policy, especially in immigration and trade, can not make any major policy transformation, which is too much.
Although the Fed is expected to maintain interest rates for a period of time, everything may change in the next few months. The future decision of interest rates will affect our financial situation, including our finances Savings account, How much is we owe extra Credit card debt And are we capable of taking out car loans or mortgage loans.
This is about the rapid entry of interest rates, and what may mean to your money today’s decision.
Read more: Trump cannot reduce interest rates. But what are the power of the president to the Federal Reserve?
How to determine interest rates for the Federal Reserve
The Fed will meet eight times a year to evaluate economic health and formulate monetary policy. It is mainly to change the federal capital interest rates. The benchmark interest rate used by Bank of America will be lent to each other overnight.
Imagine the situation where financial institutions and banks formed orchestras are instructed to guide the market and control currency supply. Therefore, although the Fed has not set up a percentage that we owe directly credit card and mortgageIts policy has a chain reaction to daily consumers.
Interest is the fee paid by your borrowing money, whether it is loan or a credit card. Many banks tend to follow when the Central Bank’s “master” increases interest rates. This may make the debts we carry more expensive (for example, APR 22 % credit card and 17 % APR), but it may also lead to High savings output (5 % APY pairs of 2 % APY).
When the Fed reduces interest rates, just like three times last year, banks tend to reduce interest rates. Our debt may become less troublesome (although not too much), and we will not become very high SavingsEssence
How does inflation and employment market affect the Federal Reserve
Financial experts and market observer spend a lot inflation And the labor market.
Economists worry that the Trump administration is implementing a policy of re -burning inflation. As economic activities have been expanding and the inflation rate is still improved, the Fed can not reduce any interest rate until the later year.
Generally, when the inflation rate is high and the economy is getting higher, the Fed tries to impress the brake by setting high interest rates and reducing currency supply. Between March 2022 and July 2023, the Fed increased 11 federal capital interest rates, which helped reduce the highest price of record.
However, if the Fed reduces inflation too much, it will take risks. The rapid decline in any major economic activity will lead to a major surge in unemployment and recession. You may hear the term “soft landing”, which is to keep inflation in a balanced behavior of keeping inflation and low unemployment rate.
The economy will not be too hot or too cold. Just like Gordolk’s porridge, it must be just right.
Read more: The Fed’s decision this week means the mortgage loan interest rate
Today’s Federal Reserve decides to mean your money
In the past few years, high interest rates have made credit and loans more expensive. Although the reduction in interest rates last year did not immediately improve our financial situation, the government’s monetary policy this year will definitely affect your funds.
This is what today’s decision means Credit card APR,,,,, Mortgage rate and SavingsEssence
🏦 Credit card APR
Maintaining federal fund interest rate stability may cause credit card issuers to charge the same annual percentage interest rate monthly. However, each publisher has different rules for changing APR.
“Some credit card APR decreased slightly after the Federal Reserve reduced tax rate last year, but they are still very high. Even if you cannot pay off the full balance, you must try to pay more than the minimum payment month. Personal loans may help you pay off your debt faster. “– – Tiffany ConnorsCNET currency editor
率 Mortgage loan interest rate
The Fed’s decision will affect the overall loan cost and financial status, thereby affecting the housing market and Housing loan interest rateAlthough this is not one -to -one relationship.
“Even if the Fed maintains stable interest rates, the interest rate of mortgage loans will continue to fluctuate due to responding to new economic data and political announcements. For the Fed’s restoration of interest rates and mortgage interest rates, further inflation is needed. Mortgage interest rates often often will often be Rise quickly and slowly decrease. – – Katherine WattCnet Money Housing Reporter
🏦 Savings rate
The savings rate is variable and locks with the federal fund interest rate. Therefore, after reducing the tax rate later this year, your annual percentage may decline. Remember, not all banks are equal, we will track regularly The best high -yield savings account and Deposit certificate In cnet.
“The suspension cost means that at least we are unlikely to see any major changes in CD and savings account APY. This allows the storage households to lock the high CD rate or use high advantages, so that the savings have more time to maximize the time to increase the maximum extent. The income savings rate still exists. ” – – Kelly EnstCNET currency editor
The next step is to reduce the interest rate
Experts predict that although market observers and economists usually have different views on the Fed’s currency decisions, there are still two potential to reduce tax rates. The speed of reducing interest rates will depend on the employment market, inflation pressure, and other political and financial development.
