![]() The independent foundation is separate from Charles Schwab and Co. The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. For the Fed to leave rates alone, at least for now, “gives them a little bit of time to evaluate the broader economic and inflationary landscape to see if further rate hikes are warranted.”ĪP Auto Writer Tom Krisher in Detroit contributed to this report. “There’s a very significant cumulative impact (of rate hikes), but it doesn’t hit all right away,” McBride said. (The current national average for a 30-year fixed-rate mortgage is 6.71%, according to Freddie Mac.) If the economy does cool, Channel predicts that mortgage rates may end the year closer to 6% than to 7%. “It just means they may be willing to hold rates where they are and let the economy continue to settle without more rate-related prodding in the immediate future.” ![]() “That doesn’t mean the Fed is going to start cutting rates or that other rate hikes this year are completely out of the question,” said Jacob Channel, senior economist for LendingTree. The central bank has now raised rates at its fastest pace in 40 years. “That might mean the Fed is going to have to hold rates higher for longer, and it may even mean boosting rates further in the months ahead,” McBride said. Reducing inflation back to the Fed’s target level will require more time. Many households are still feeling heavy financial pressure as a result. Yet the latest inflation readings remain well above the Fed’s 2% target. Inflation, which peaked above 9% last year, is less than half that level now. “That’s not a bad place to have money parked,” said McBride. The average reduction was significant - 6 percentage points. In a recent report, LendingTree concluded that a majority of cardholders who had asked their card issuers for a lower rate received one. Matt Schulz of LendingTree suggested that consumers who have debt should “assume that rates will continue to rise and focus on paying down their balances as quickly as possible,” to err on the safe side.Ĭard users, he said, might consider asking their issuers to offer a lower Annual Percentage Rate (APR), if possible. “If you have credit card debt, that is a top priority to get paid down.” “That means debt repayment has taken on a renewed urgency,” McBride said. Some consumers may struggle to continue making loan payments on time as they simultaneously face inflated prices for many goods and services. Even if rates were to hold steady, borrowing costs across the economy will remain much higher than they were in recent years. McBride noted that credit card rates, in particular, are at or near their all-time peaks, mortgage rates have more than doubled in two years and auto loan rates have reached their highest level in about a dozen years. “Some of these rates are higher than many consumers have ever seen.” ![]() “Even once the Fed stops raising interest rates, borrowing rates are still very, very high,” said Greg McBride, ’s chief financial analyst. That doesn’t necessarily mean that relief is on the way, especially with the forecast of possibly two additional hikes this year. ![]() Though the Fed hasn’t likely reached the top of its rate-raising cycle, it’s getting closer. HOW WILL BORROWERS BE AFFECTED BY ALL THIS? Fortunately, that isn’t likely to change anytime soon. And in the meantime, people with savings accounts are enjoying higher yields than they have in years. Still, some people may feel encouraged by the possibility that loan rates might not rise much more. Consumers would still have to bear the weight of higher-cost auto loans, mortgages, credit cards and other forms of borrowing. And even after the Fed has stopped hiking, it’s likely to keep borrowing rates at a peak for months to come. That said, the Fed’s policymakers indicated that they envision potentially two more hikes this year - a more hawkish forecast than had been expected. NEW YORK (AP) - The Federal Reserve’s decision Wednesday to leave interest rates alone for the first time in 11 meetings raises hopes that it may be at least nearing the end of its rate-hiking campaign to cool inflation. ![]()
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