The Fed did not move on interest. That’s why it’s a big deal

Federal Reserve Pause interest rates of interest rates At today’s meeting. It is enough to say that It wasn’t The most interesting solution from 2025 so far.

However, given that the Fed reduced interest rates three times in 2024, we hoped on the way to lower loan costs. Last week President Donald Trump said he would Require interest rates to drop immediately.

The Fed is currently in a detention model. There is too much uncertainty about incoming administration policies, especially with regard to immigration and trade, to make major changes in policy.

While the Fed is expected to keep interest stable for a while, everything can change over the next few months. Future rates on interest rates will influence our finances, including how much we benefit from our Savings accounts, How much additional we owe to carry Credit card debt And whether we can afford to borrow a car or mortgage.

Here’s a quick interest primer and what today’s Fed’s decision can mean to your money.

Read more: Trump cannot reduce interest rates. But what power does the president have over the Fed?

How the Fed determines interest rates

The Fed meets eight times a year to evaluate the health of the economy and to determine monetary policy, mainly through changes to the federal fund rate, the interest rate used by US banks to borrow or borrow each other overnight.

Imagine a situation where financial institutions and banks make up an orchestra and the Fed is the conductor by directing markets and controlling money. So, although the Fed does not directly determine the percent we owe to our Credit cards and mortgageHis policies have the effect of pulsation on the daily consumer.

Interest is the cost you pay for money, whether it is through a loan or a credit card. When the Maestro Central Bank raises interest rates, many banks tend to follow. This may do a debt we carry more expensive (such as a 22% APR credit card against Apr 17%), but can also lead to Higher savings yields (5% APY vs. 2% APY).

When the Fed lowered the rates, as well as three times last year, banks also tend to drop their interest rates. Our debt can become a little smaller clumsy (though not a lot) and we won’t become as high a Yield of our savingsS

How do inflation and labor market affect the Fed

Financial experts and market observers spend a lot of time predicting time to reduce interest rates and hike based on the direction of the economy, with a special focus on Inflation And the labor market.

Economists are concerned that the Trump administration is implementing policies that will revive inflation. As economic activity continues to expand and inflation remains to some extent increased, the Fed is unlikely to make a decrease in interest rates until later this year.

In general, when the inflation is high and the economy is in overdrive, the Fed tries to pump the brakes, determining higher interest rates and reducing money supply. Between March 2022 and July 2023, the Fed increased the percentage of federal funds 11 times, which helped to slow down a record increase in prices.

However, Fed takes the risk if he reduces inflation too much. Any major, rapid decline in economic activity can cause a big jump in unemployment, leading to recession. You can hear the phrase “soft landing” that refers to the act of balancing the maintenance of inflation in check and unemployment low.

The economy cannot be too hot or too cold. Like the porridge for Goldilocks, it should be accurate.

Read more: What does Fed’s decision mean this week for mortgage rates

What does the Fed’s decision on your money mean today

In the last few years, high interest rates have made the loan and loans more expensive. Although last year’s interest rate reductions did not immediately improve our financial status, the government’s monetary policy this year will definitely affect your money in the long run.

Here’s what today’s decision on APR credit card., mortgage rates and Savings pricesS

🏦 APRS credit card

Retention of federal funds can steadily cause credit card publishers to charge the same annual percentage of your unpaid balance each month. However, each issuer has different rules for changing APR.

“Some credit cards that APRS slightly reduced after the Fed’s rates are reduced last year, but they are still really high. Even if you can’t pay the full balance, try to make more than the minimum payment each month to Avoid extra interest.– Tiffany ConnorsCNET Money Editor

🏦 Mortgage rates

Fed’s decisions influence the overall cost of loans and financial terms, which in turn influence the home market and Home Loan PricesAlthough this is not a connection one to one.

“Even when the Fed has stable interest rates, mortgage rates will continue to hesitate in response to new economic data and political communications. For the Fed to resume the reduction in interest rates and mortgage rates to decrease, more progress is needed in inflation. Even then is necessary. – Catherine WatCNET Money Housing Reporter

🏦 Savings prices

Savings prices are variable and move in locking with the federal percentage of funds, so your annual percentage profitability may decrease after more reductions in the rates later this year. Just remember that not all banks are created equal and we regularly track The best high-yield savings accounts and Deposit certificates In CNET.

“Pause on the tariff means that we are unlikely to see a significant change in CDs and savings accounts, at least for now. This gives the savings more time to increase your profit by locking at a high CD percentage or taking advantage of the high height prices of savings while they are still around. ” – Kelly ErnstCNET Money Editor

What Next For Interest Cuts

Experts envisage the potential for two cuts at the percentage sometime in 2025, although market observers and economists usually have different opinions on the Fed’s cash decisions. Interest reduction rate will depend on the labor market, inflation pressure and other political and financial developments.