The next interest rate decision may affect your money more than you think

If you try to finance a car, take out a House loan Or payment of credit card debts, you may have noticed that borrowing costs are still expensive. After the Federal Reserve reduced interest rates three times last year, many of us hoped to obtain cheaper credit in 2025.

But interest rates are unlikely to budge any time soon.

The US Central Bank meets eight times a year to evaluate the health of the economy and develop monetary policy, in the first place through changes in the price of federal funds, and the standard interest rate used by American banks to lend or borrow money overnight. At its next meeting from May 6 to 7, Federal reserve is expected To leave borrowing rates alone for the third time in a row.

Federal Reserve Chairman Jerome Powell remains constant in monitoring the conditions of the labor market and inflation pressure before making any discounts. Despite the pressure from the White House to low rates, there is a lot of uncertainty about the effect of the Trump administration’s economic agenda, such as Definitions And the government lowering.

Meanwhile, American families Switch middle Fears of stagnation. Economists are concerned about this Definitions More inflationary pressures will unleash. Investors reduce their losses in the steady stock market. There is widespread concern about work, TaxesPrices, social programs, and everything else affects our financial livelihoods.

Even if the Federal Reserve holds interest rates fixed next week, its tone and messages have a major impact on the markets. Any talk about risks or uncertainty can frighten investors and cause a reaction chain in the economy.

What affects the decision of the Federal Reserve?

Financial experts and market scenes spend time to predict whether the Federal Reserve will increase or reduce interest rates based on official economic data, with a special focus on Economic inflation and Labor market. This is because the official “mandate” of the Federal Reserve Mobilization is the balance of price stability and the maximum employment.

“The monetary policy of the Federal Reserve depends on any aspect of their mandate, inflation or employment, it is far from the goal,” he said. Matthew MartinSenior American economists with Oxford’s economy.

Some economists expect that the Federal Reserve will remain on the sidelines until late this year, while others expect this summer to be reduced.

In general, when inflation is high and the economy is in an extra state, as it was in early 2022, the Federal Reserve raises the standard interest rate to discourage borrowing and reduce the cash supply. When unemployment is high and the economy is weak, the Federal Reserve reduces its standard price, allowing banks to reduce financial pressure on consumers and make them less expensive to buy large tickets through financing and credit.

You may hear the phrase “soft landing”, which indicates the Federal Reserve Budget Law. According to those who run the market, the economy should not be very hot or very cold – it is supposed to be completely correct, like the porridge in Goldilocks.

Is there not a risk of recession?

There are many warning signs of economic shrinkage – weakening in GDP, consumer confidence decreased, and an increase in workers’ demobilization. Even if the artistic recession is not yet called, there are expectations of a sharp slowdown in economic activity in the coming months.

The large wild card of the economy is the customs tariff. The definitions increase the cost of goods to local importers, as more severe prices have been transferred to consumers.

“The definitions create a complex situation for the Federal Reserve because it means the risks of inflation – but the negative risks of growth and the labor market,” said Gisella Young, the American Economic Economic in Citigram.

If inflation rises, the Federal Reserve will keep interest rates higher for a longer period. But if the definitions, along with reducing their size and reducing costs, are severely shrinking the economy, the Federal Reserve may reduce the rates to stimulate growth.

There is a risk in both cases.

Martin said: “If officials are acting too late, they risk they become” behind the curve “and (caused) a more severe shrinkage,” Martin said. “If they reduce interest rates very early, they may risk high and sticky inflation along with weak economic growth – known as stagnation – which will be the worst of the two worlds.”

How does interest rate changes affect you?

Federal reserve decisions regarding interest rates affect the amount that we win from Savings accountsHow do we owe debts and whether we can withstand a monthly mortgage payment.

Imagine the position in which financial institutions, orchestra banks and chatting are Mosul, directing markets and controlling money supply. Although the Federal Reserve does not directly control the percentage that we condemn Credit cards and Real estate loansIts policies have the effect of domino on the daily consumer.

The benefit is the cost that you pay to borrow money, whether through a loan or credit card. When the central bank increases interest rates, many banks tend to follow up. This can make the debt we carry more expensive (April credit card by 22 % compared to 17 %), but it can also lead to this Optimized savings (APY from 5 % versus 2 %).

When the Federal Reserve reduces interest rates, banks tend to have low interest rates as well. Cheap borrowing costs encourage investment and make debt bonus slightly less tired, but we will not get a height a Hold our savings.

Experts still expect price discounts in 2025, although market and economists usually have different opinions about the monetary decisions of the Federal Reserve. The frequency of reducing interest rates depends on the labor market, inflation and other political and financial developments.

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Here is the federal reserve decision next week APRS credit cardand Mortgage rates and Savings rates means.

🏦 APRS credit card

Keeping the fixed federal funds can maintain the percentage of the annual percentage on your suspended balance every month. Some APRS credit cards decreased slightly after the FBI discounts last year, but they are really high. However, each source has different rules about changing APRS. To avoid high -use debt accumulation, try to pay your balance completely or at least make more than the minimum payment every month.

– Tiffany ConnorsCNET money editor

🏦 Mortgage rates

The Federal Reserve Decisions affect the total borrowing costs and financial conditions, which in turn affect the housing market Home loan pricesAlthough it is not an individual relationship. Even when the Federal Reserve carries constant interest rates, mortgage prices can fluctuate in response to new economic data, which affect the bond market and long -term treasury revenues. It will take a significant economic shrinkage, a long decrease in treasury revenues and a series of discounts in prices for a significant decline in mortgage rates.

– Catherine WattCNET Money Housing Reporter

🏦 Savings rates

Savings rates are variable and move in Lockstep with the rate of federal funds, so the percentage of annual percentage may decrease after more price cuts later this year. Although each bank sets different prices, we may not see a significant decline in prices High -yield savings accounts or Deposit certificatesAt least now. This savings give more time to increase their profits to the maximum by locking a high -disk rate or taking advantage of high savings while still present.

– Kelly ErnestCNET money editor

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