What that means for your money

By Finance News On Jun 19, 2025

CNBC Fed Survey: Respondents continue to forecast weaker growth and higher inflation

The Federal Reserve announced Wednesday it will leave interest rates unchanged.

The Fed decision came amid demands from President Donald Trump to lower the key borrowing rate benchmark, and escalating attacks on Fed Chair Jerome Powell even hours before the announcement.

Trump has been pressuring Powell for a rate cut, arguing that maintaining a fed funds rate that is too high makes it harder for businesses and consumers to access cash, adding more strain to the U.S. economy. But Powell has said that the federal funds rate is likely to stay higher as the economy changes and policy is in flux.

That’s enough to keep the central bank on the sidelines, for now, according to Greg McBride, Bankrate’s chief financial analyst. “With the uncertainty around tariffs and how that could impact inflation readings in the month ahead, there’s an ongoing sense of another shoe about to drop,” McBride said.

The federal funds rate sets what banks charge each other for overnight lending, but it also has a domino effect on almost all of the borrowing and savings rates Americans see every day.

When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans — including credit cards, auto loans and home equity lines of credit — quickly followed suit. Even though the central bank lowered its benchmark rate three times in 2024, those consumer rates are still elevated, and are mostly staying high, for now.

“Borrowing rates are high, with mortgage rates near 7%, many home equity lines of credit in double-digit interest rate territory, and the average credit card rate still above 20%,” McBride said. “But savers continue to be rewarded with inflation-beating returns on the top-yielding savings accounts, money market accounts, and certificates of deposit. Retirees, in particular, are earning good income on their hard-earned savings.”

Five ways the Fed affects your wallet

1. Credit cards

Many credit cards have a variable rate, so there’s a direct connection to the Fed’s benchmark.

With a rate cut likely postponed until at least September, the average credit card annual percentage rate is currently just over 20%, according to Bankrate — not far from last year’s all-time high. In 2024, banks raised credit card interest rates to record levels and some issuers said they are keeping those higher rates in place.

“Interest rates on credit cards are painful because they are so high,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion.

“The reality is you could drop the fed funds rate by two full basis points and all you are doing is lowering your interest rate from say 22% to 20%,” he said.

Borrowers are better off switching to a zero-interest balance transfer credit card, or consolidating and paying off…