The borrowers expecting more financial relief from the Federal Reserve may wait for their hands, as the Central Bank expects to hit the stagnation button on an additional rate cut in the January 29 meeting.
According to more than 9 economists in 10 economists by the financial data site factset, Fed on Wednesday expected to keep its benchmark rate stable between 4.25% to 4.5% in its current range. Most economists also guess that the Fed will stop the cutting in the March 19 meeting, which means that the next rate cut may not be the Central Bank's 7 May meeting, the factset data show.
The January 1 stagnation for the shutdown of the rate cut started in September 2024 will temporarily mark an end, which has pushed the federal money rate below a percentage point. This helps trim the cost of borrowing for home equity lines of credit cards, credit and other loans, which provide some relief to inflation consumers and businesses.
But in December, Fed indicated that it Expected less cuts Before this was estimated in 2025, Fed Chair Jerome Powell indicated inflation This is above the target of the central bank's annual 2% rate. At her top, economists say that it is likely that the Fed Trump wants to wait for the policies of the administration such as adding new tariffs and the broad exile of immigrants. Both can prove inflation,
“The reason for this is that the fed is not jumping guns to reduce the rates rapidly and further, on one side, inflation has not been taken. They looked carefully on the data, and it still still above the target Is, so if you further reduce the rates, inflation will reinforce, “Irrasmus Caersting, a professor of economics at the University of Wilnova, told CBS Manivatch.
Secondly, he said, “Tariff or large -scale exile inflation is expected. For this reason, it is also right to be careful about reducing the rates.”
Here is what you know about a rate stagnation by Fed.
When does Fed decide their next rate?
The Federal Reserve will announce its rate on EST at 2 pm on January 29, followed by a press conference on EST at 2:30 pm with Fed Chair Zerome Powell.
How will a stagnation on rate cut affect my money?
Fed cut his benchmark rate three times last year, kicking the jumbo with a decrease of 0.5 percent in September. There were two consecutive after this 0.25 percent point cut: In the November 1 meeting, one and another in their December meeting.
But a stagnation in early 2025 means that consumers cannot expect additional proximity relief at the cost of borrowing, say experts say.
“Fed is expected to ride as a cavalry and will soon be really disappointed to protect you from high interest rates,” said Matt Shulz, the chief credit analyst of Landingtri, said. “It is true whether you are talking about mortgage, auto loan, credit card or something else.”
Because the rate of credit card and other borrowing costs are unlikely to change, consumers should work on getting their high-onion loans under control, Shulz said. He said that it can be helpful in reducing interest payments in 0% balance transfer credit card or consolving credit card loans with personal loans.
If there is a bright side, it is for savings, given that they should still be able to find concrete rates on high-tops savings accounts, even though they have declined as Fed has fallen as the Fed last year to his benchmark rate Started trim, Shulz said. Some savings accounts are still paying above 4%, below 5% a year ago.
He said, “Returns on high-up-up savings accounts have fallen from their record levels as the fed has gone into low rates. However, the fed should stop, as the fall should be slow as well,” he said.
When will the mortgage rates come?
One of the disappointments for the owners of the house along with the house huntters, who want to refinance at low rates, have stubbornly stubbornly in high mortgage rates. Despite the three-year cut in the last year, the average 30-year home loan is near 7%near a 25-year high level.
Despite the fed deduction, the mortgage rates have not declined as home loans are based on many factors in addition to federal money rates, including the comprehensive economic trends and changes in yield for American 10-year-old Treasury bonds.
Experts said that given the concerns of economists that President Trump's plans could prove inflation, the mortgage rates can never be low, the experts said.
Housing Finance Company, A. Walker & Company CEO Austin Walker said, “The consensus is that the possibility of rates will remain unchanged until the market has more clarity around the possible policy effects, as it is related to immigration, taxes and tariffs, ” A. A housing finance company, CEO of Walker & Co., said.
Will the interest rates be reduced under President Trump?
Last week, The Davos, at the World Economic Forum's annual event in Switzerland, said that he would “demand that interest rates fall immediately, and so, they should fall into the world.”
Experts say it is unlikely that Mr. Trump can affect Fed at low rates, as the central bank is an independent institute that makes its decisions on economic data rather than the orders of elected officials.
The rates are determined by the Federal Open Market Committee (FOMC), which consists of 12 members – seven members come from the Board of Governors of the Fed; Four stems from eleven Reserve Bank Presidents, who work on a rotating basis on each year terms, and an FOMC member is the chairman of the Federal Reserve Bank of New York.
Meanwhile, Powell has said Will not step down If Mr. Trump, who has previously criticized Powell's performance, asks him to resign, saying that the President does not have the power to set or demot the fed chair. His term as a fed chair ends on May 15, 2026.
At the same time, economists are estimating higher rate cuts in 2025, but not May or later according to factset polling. But a wild card is whether inflation may survive more in early 2025 due to the policies of Trump administration.
“The important thing has been extended as a new administration,” said in an email, the main economist of EY Gregory Dako. The dako said that it is estimating the three 0.25 percentage points this year – in March, June and September. “This year, we hope that the fed will run carefully.”