Despite the comments of President Donald Trump on Thursday, the federal preparation system is expected to be stable at the end of the two -day meeting next week.
So far, the Central Bank has hiked 5.25 % points between 2022 and 2023, then re -adjusts the policy slowly and strives to fight inflation that exceeds 2 % of the Fed. I am doing it. In the trajectory of the campaign, Trump stated that inflation and high interest rates were “destroying our country.”
However, for consumers who are struggling with the weight of high price and high borrowing costs, there is almost no rescue for now.
“Anyone who wants the Fed to rescue you on a cavalry will really be disappointed to rescue you from a high interest rate,” said Maturz, LendingTree’s Chief Credit Analyst. Ta.
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The Federal Fund rate set by the US Central Bank is a rate borrowed and rented by the bank overnight. It is not a fee paid by consumers, but the movement of the Fed still affects borrowing, and consumers see it every day.
When the Fed’s funding rate is ultimately decreasing, consumers may decrease borrowing costs with various loans, such as mortgages, car loans, and credit cards, and borrowing money may be cheaper.
This is the breakdown of how it works:
Credit card
Most credit card rates are different, so they are connected directly to the Fed benchmark. However, the Central Bank’s cost of credit cards has risen last year, despite the full reduction in benchmark interest rates.
Greg McBlide, a Banthrate’s Chief Financial Analyst, often responds to a lower Fed rate than an increase.
At present, the average credit card rate is more than 20 %, according to Banthrate.
Until then, the delinquency was high, and according to the Philadelphia Federal Preparatory System Report, the clerk owner only paid only for the first time in 12 years.
“It means that managing the debts of the high profits is more important than ever,” Schultz said.
Mortgage fee
Even if the Fed has been reduced, the mortgage rate has risen in recent months.
The mortgage rate for 15 and 30 years is fixed, and the Fed’s policy has not declined because it is mainly linked to the yield and economy of the Ministry of Finance. Most people have a fixed interest rate mortgage loan, so their rates will not change unless you refinance or sell the current house and buy another real estate.
“Most mortgage debt is fixed, so existing housing owners are not affected,” said Banthrate’s McBride. “It has been added to affordable prices to become a house buyer and maintains sales on ice.”
According to Banthrate, the average rate of fixed interest rate mortgages for 30 years was 7.06 %.
Automatic loan
The car loan fee is fixed. However, these debts are one of the most rapid consumer credit sources other than mortgage loans. As the price of cars is rising, payments are increasing, and the balance of unpaid automobile loans is driven by over $ 1.64 trillion.
According to Bankrate, the average price of a five -year new car loan is currently about 7.47 %.
“The reduction of 2025 is gradually signaling that affordable prices are likely to continue for most new vehicle buyers,” said Joseph Yun, an Edmans consumer insight analyst.
“The further reduction of interest rates in 2025 can help some extent, but it is difficult to make significant improvements in the new year consumers due to continuous rise in the price setting of new vehicles. You will be, “says Yoon.
Student loan
Most borrowers are not immediately affected by the Fed’s movement, as the federal government’s student loan rate is also fixed.
However, undergraduate students who have obtained direct federal students from 2024 to 25 will pay 5.50 % to 6.53 % from 2023 to 2014. The next grade interest rates are partially based on the Ministry of Finance’s May auction.
Private student loans tend to have a floating interest rate related to Prime, the Ministry of Finance’s bill, or another fee index. In other words, these borrowers usually pay more interest. However, how much does the benchmark change?
Saving rate
Central banks do not directly affect the deposit rate, but yields tend to correlate with the change in federal funding rates.
According to Mcbride, as a result of a recent Fed -a -hiking of Fed, the Top Yield online savings account provided the highest return in more than 10 years and paid nearly 5 %.
“The good thing about the Fed is a bystander is that the savings can enjoy the yield of hitting these inflation for a while,” said McBride.
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