The borrowers expect more financial relief of the Federal Reserve can wait for their hands, since the Central Bank is expected to press the pause button on additional rates cuts at its meeting on January 29.
The FED is expected to maintain its stable reference rate on Wednesday in its current range between 4.25% and 4.5%, according to more than 9 in 10 economists surveyed by Factset of the financial data site. Most economists also predict that the Fed will not stop at their March 19 meeting, which means that the next rate cut may not occur until the meeting of May 7 of the Central Bank, according to data data.
A January pause would mark an end, at least temporarily, to the gust of fed rate cuts that began in September 2024 that have reduced the rate of federal funds to a percentage point. That helped cut the loans for credit cards, domestic capital credit lines and other debts, providing a respite to consumers and companies with inflation.
But in December, the Fed said that Wait for less cuts In 2025 of what he had projected previously, with the president of the FED, Jerome Powell, pointing out inflation That remains above the objective of the central bank of an annual rate of 2%. In addition to that, economists say it is likely that Fed wants They could try inflationary.
“The reason why the Fed is not jumping the weapon when lowering rates faster and more is that, on the one hand, inflation has not gone. They carefully look at the data, and it is still stubbornly above the goal, by What exists concern if further decreases rates, inflation would rise again, “Erasmus Kersting, professor of economics at the University of Villanova, told CBS.
Second, he added: “It is expected that rates or mass deportations will be inflationary. For that reason, the Fed is also right by being careful by reducing rates.”
This is what you should know about a Fed Rate Pause.
When does the Fed take in the next rate?
The Federal Reserve will announce its rate of rate at 2 pm Est on January 29, followed by a press conference with the president of the FED, Jerome Powell, at 2:30 pm est.
How will my money affect a pause in rates cuts?
The Fed reduced its reference rate three times last year, starting with a reduction of percentage points of 0.5 in September. Which was followed by two consecutive 0.25 percentage points cuts: one at its November meeting and a second at its December meeting.
But a pause in early 2025 means that consumers cannot expect additional short -term relief in indebted costs, experts say.
“Anyone who expects the Fed to enter as the cavalry and rescue the high interest rates in the short term will really feel disappointed,” said Matt Schulz, head of credit of Lendingtree, in an email. “That is true if you are talking about mortgages, loans for cars, credit cards or almost anything else.”
Because credit card rates and other indebted costs cannot change, consumers should work to obtain their higher interest debt under control, added Schulz. Resorting to a 0% balance transfer credit card or consolidating the credit card debt with a personal loan may be useful to reduce interest payments, he said.
If there is a positive side, it is for savers, since they should still be able to find solid rates in high performance savings accounts, although they have decreased since the Fed began to cut its reference rate last year, Schulz said. Some savings accounts still pay above 4%, below 5% a year ago.
“The returns from high performance savings accounts have fallen from their record levels as the Fed has moved at lower rates. However, as the food makes an arrest, that decrease should also decrease,” he said .
When will mortgage rates decrease?
One of the disappointments for house hunters, as well as the owners who want to refinance in lower rates, has been thirdly high mortgage rates. Despite the three Fed rates cuts last year, the average mortgage loan of 30 years remains close to 7%, near the top of 25 years.
The mortgage rates have not decreased despite the fed cuts because housing loans are based on a series of factors in addition to the federal fund rate, including broader economic trends and changes in the performance of the Treasury Bonus to 10 US years. UU.
Given the concerns of the economists that President Trump’s plans could try inflationary, the mortgage rates may not go down in the short term, experts said.
“The general consensus is that rates will probably remain unchanged until the market has more clarity on the possible impacts of policy with regard to immigration, taxes and tariffs,” said Austin Walker, CEO of A. Walker & Co., a housing financing company.
Will interest rates be reduced under President Trump?
Last week at the Annual World Economic Forum in Davos, Switzerland, Trump said “would demand that interest rates immediately fall and, in the same way, should fall throughout the world.”
It is unlikely that Mr. Trump can influence lower rates, since the Central Bank is an independent institution that bases its decisions on economic data, instead of the orders of elected officials, experts say.
The fees are established by the Federal Open Market Committee (FOMC), consisting of 12 members: seven members come from the Board of Governors of the Fed; Four come from the eleven presidents of the Bank of the Reserve, each of which has a period of one year in a rotating way, and a member of the FOMC is the president of the Bank of the Federal Reserve of New York.
Powell, meanwhile, has said that he He will not give up If Trump, who previously criticized Powell’s performance, asks him .
At the same time, economists predict more rates cuts in 2025, but not until May or even later, according to Factset Polling. But a wild card is whether inflation could increase by early 2025 due to Trump administration policies.
“It is important to emphasize that perspectives are clouded by greater political uncertainty as a new administration assumes the position,” said EY chief economist Gregory Daco, in an email. Daco added that he is predicting three cuts of percentage points of 0.25 this year, in March, June and September. “This year, we hope that Fed steps carefully.”