Ahead of next week’s Federal Reserve Conference, President Donald Trump and Federal Reserve Chairman Jerome Powell are not affiliated with low ties.
“The interest rates are too high, and my family is hurting,” Trump wrote in a Truth Social Post Wednesday.
Trump said he hopes the Fed will drop by up to 3 percentage points to drive economic growth. (Central banks usually adjust their benchmarks at 25 baseline points, but rates have been reduced to zero recently as recently as the Covid pandemic.
The president argues that maintaining a federal funding rate that makes it difficult for businesses and consumers to borrow, putting the United States at a lower country’s economic disadvantage.
The Fed’s benchmark sets what banks charge each other for overnight loans, but it also has a subtle effect on almost every borrowing fee and savings rate that Americans see every day.
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Powell said earlier this month that the Fed likely had cut fees by now but was postponed due to the uncertainty and inflation risks brought about by Trump’s tariff agenda. Many economists say they are only beginning to feel the full impact from tariffs on pricing, and inflation could recover later in the year.
Since December, federal funding rates have been stable within the target range of 4.25% to 4.5%. According to CME Group’s FedWatch gauge, pricing in the futures market means there is little chance of interest rate reductions when the Fed runs next week. Market prices indicate that the Fed is much more likely to consider cutting rates in September.
As the Fed’s funding rates fell, consumers could see borrowing costs begin to decline too.
But “there is no guarantee that this will lead to lower fees,” said Brett House, professor of economics at Columbia Business School.
From mortgage fees and car loans to credit cards and savings accounts, let’s see how the Fed can affect your finances.
Home loan
“Housing in our country is late as Jerome is ‘too late’ Powell refuses to cut interest rates,” Trump said in a social media post on July 23.
However, fixed mortgage fees should not be tracked directly by the Fed, specifically. They are largely linked to the Treasury yields and the US economy. Advancement of the Tariffs and the Wide Economy As concerns about the Treasury grow higher, mortgage rates remain stubbornly high.
According to the bank rate, the average rate for a 30-year fixed-rate mortgage is currently close to 6.8%. The national issue of limited inventory and affordability for housing is a key issue regardless of the Fed’s next move.
Eugenio Aleman, chief economist for Raymond James, said in a statement that the housing market “continues to struggle under high home prices and high mortgage rates.” Recent data shows that the median price of homes sold reached record highs in June.
Credit Card
Most credit cards have a more direct connection to the Fed benchmark.
But regardless of the central bank’s next move, credit card rates are high and could stay there. According to the Bank Rate, the average annual rate is currently just over 20%, not far from last year’s record.
“Credit card fees are in a very high level of retention pattern,” McBride said.
Even if the APR is 3 percentage points lower, most experts say it does not significantly relieve the strain on rotational balance.
Automatic loan
Auto loan fees are fixed for the life of the loan. Payments continue to grow as car prices rise, along with pressure from Trump’s plan to impose high tariffs on foreign-made vehicles and auto parts.
According to the bank rate, the average rate for new car loans over the past five years is currently 7.22%.
“Consumers are growing continuously to buy new vehicles in this market,” said Ivan Drury, director of insights at Edmunds. Now, new car buyers’ share is more than ever, including car payments of more than $1,000 per month.
Student loan
Save money
Conversely, according to Bank Rates, the best online savings accounts still offer above average returns, currently paying more than 4%.
Central banks do not directly affect deposit rates, but yields tend to correlate with changes in eligible federal funding rates. So even if you change that rate, your savings rate is above the inflation rate, and is considered a rare victory.
“It’s not a good time to be a borrower, but it’s a great time to save money. Lie on that,” Bankrate’s McBride said.
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