Inflation lingers, but will interest rate change?

If you’re hoping for an interest rate cut from the Fed today, don’t hold your breath.

Chances of a rate cut from the Federal Reserve are slim to none, forecasters say, when the panel announces its interest-rate decision at the close of a two-day meeting. 

That means the Fed’s benchmark interest rate will likely remain in the range of 5.25% to 5.5%, where it has sat for nearly a year, at a 23-year high. 

Analysts had once expected several rate cuts in 2024, but nagging inflation stayed the Fed’s hand. Today, forecasters predict no rate cut before fall. 

Here’s what to expect:

Learn more: Best current CD rates

• The Federal Reserve will make an interest-rate announcement at 2 p.m. Eastern Time: probably no change to the benchmark rate.
• Fed Chair Jerome Powell will hold a press conference at 2:30 p.m.
• Absent a rate cut, the market will parse Powell’s words for any clue of when the Fed might act. 

What time is the Fed decision today?

The Federal Reserve is expected to announce its interest rate decision at  2 p.m. Eastern Time on Wednesday. Fed chair Jerome Powell will hold a press conference at 2:30.

Powell will likely talk about the decision and shed light on how the central bank views the overall economy. The market will look for clues in Powell’s remarks to predict what rate actions the Fed might take over the rest of the year. 

What are the latest inflation numbers?

Inflation, a sustained increase in prices throughout the economy, has been well above the 10-year median of 2.1% for more than three years. Fed policymakers say they prefer inflation at 2%, or “low and stable,” so we can “make sound decisions regarding saving, borrowing, and investment.”

Inflation has fallen significantly in the past two years but remains above the 2% rate that the Fed targets. The U.S. inflation rate, as measured by the consumer price index, was unchanged for the month when seasonally adjusted while the annual rate fell slightly to 3.3%.

– Jim Sergent

What will happen to credit card interest rates? 

Credit card interest rates are still climbing, even with the Fed on hold. The average annual percentage rate (ARP) on a new card in June notched the biggest monthly increase since November, rising to 24.80%, LendingTree said. 

“Consumers need to understand that the cavalry isn’t coming anytime soon, so the best thing you can do is take things into your own hands when it comes to lowering credit card interest rates,” said Matt Schulz, LendingTree credit analyst.

– Medora Lee

How can I manage credit card debt when rates are high? 

According to LendingTree credit analyst Matt Schulz, options include:  

• Getting a credit card with 0% interest on balance transfers and purchases 
• Consolidating debts with a low-interest personal loan 
• Asking your card issuer for a lower rate 
• Seeking credit counseling 
• Shopping around for the lowest rates and best deals 

– Medora Lee

Could the Fed feel pressure to cut rates in step with Canada and Europe?

Last week, the European Central Bank and Bank of Canada each lowered their key rates by a quarter point.

Do those moves put the Fed under pressure to cut rates in the U.S.?

“Publicly, the Fed has to say there’s no pressure, but privately, it might be a consideration,” said Stephen Bittel, founder and chairman of Terranova Corporation, noting that businesses may head abroad to borrow at a cheaper rate. 

But to safeguard consumer purchasing power, experts say, the Fed needs to stay focused on lowering inflation.

“The average person is going through hell,” said David Lynd, chief executive at real estate company The Lynd Company. “Inflation is ravaging the consumer. They’re out of money, used up their credit cards, borrowing from mom and dad. There’s not a lot left with inflation not going down.”

Minneapolis Fed President Neel Kasharki says consumers “viscerally hate high inflation” and prefer recession to inflation. “High inflation affects everybody. There’s no one I can lean on for help because everyone in my network is experiencing the same thing I’m experiencing.”

And there’s still a risk that high inflation could persist. “The economy has repeatedly surprised to the upside since the Fed stopped hiking and began forecasting cuts,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA.

– Medora Lee

When can I expect mortgage rates to fall? 

The Fed doesn’t set mortgage rates, but what it does with the federal funds rate can influence them, along with the bond market and inflation. 

“There’s a good chance that we’re going to need to get used to rates around 7% again, at least until we start getting better economic news,” said Jacob Channel, senior economist at comparison site LendingTree. “Unfortunately, this probably means that summer homebuying season is going to be…