U.S. President Donald Trump looks on as Fed Chair Jerome Powell speaks at the White House in Washington on Nov. 2, 2017.
Carlos Barria | Reuters
Political pressure is mounting against the Federal Reserve Chair Jerome Powell, and yet the Fed is expected to hold interest rates steady at the end of its two-day meeting this week.
Despite a wave of recent attacks on Powell from President Donald Trump, futures market pricing is implying virtually no chance of an interest rate cut, according to the CME Group’s FedWatch gauge.
The president has argued that maintaining a federal funds rate that is too high makes it harder for businesses and consumers to borrow, adding more strain to the U.S. economy. The fed funds rate sets what banks charge each other for overnight lending, but also affects many of the borrowing and savings rates most Americans see every day.
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With a rate cut likely postponed until at least September, consumers struggling under the weight of high prices and high borrowing costs aren’t getting much relief, experts say.
“The combination of high interest rates, stubborn inflation and economic uncertainty is a pretty challenging one,” said Matt Schulz, chief credit analyst at LendingTree. “Most Americans don’t have a ton of wiggle room and today they have even less.”
From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at how the Fed plays a role in your finances.
credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark.
But even with the central bank on the sidelines, credit card rates have edged higher. The average annual percentage rate is currently just over 20%, according to Bankrate, not far from last year’s all-time high.
“This is a sign of banks trying to protect themselves from the risk that is out there in these uncertain times,” Schulz said. However, in this case, there is something consumers can do about higher APRs.
“The truth is that people have way more power over the rates they pay than they think they do, especially if they have good credit,” Schulz said.
Rather than wait for a rate cut that may be months away, borrowers could switch now to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a lower-rate personal loan, he said.
nationwide problem of limited inventory and housing affordability remains a key issue, regardless of the Fed’s next move.
“I don’t see any major changes coming in the immediate future, meaning that those shopping for a home this summer should expect rates to remain relatively high,” Schulz said.
