No Rate Cuts Yet, as Fed Holds Its Ground
The Federal Reserve kept interest rates frozen in place on Wednesday, maintaining the federal funds rate between 4.25% and 4.5%, a level unchanged since December. While the decision was widely expected, it’s a clear signal that rate cuts aren’t coming anytime soon—despite mounting political pressure.
Donald Trump, who has repeatedly pushed for a reduction, won’t see any movement before the next FOMC meeting in September.
Powell Cites Tariffs and Inflation Fear
During a post-meeting press conference, Powell pointed to Trump’s tariffs as a major source of uncertainty, warning that they may cause a second wave of inflation in the coming months. “The uncertainty and inflation risks are still too high,” he told reporters, a line that reflects growing concern among economists that inflation could spike in late 2025.
While the Fed didn’t raise rates, its inaction still has ripple effects. The federal funds rate—the overnight rate banks charge each other—filters into everything from credit cards and mortgages to auto loans and savings rates.
High Rates Ripple Across the Economy
Credit cards are one of the first places Americans feel the pinch. With most cards having variable interest rates tied to Fed decisions, APR levels are sitting just above 20%, one of the highest in decades.
Mortgage rates, while not directly controlled by the Fed, remain elevated due to treasury yields and market uncertainty. As of July 28, a 30-year fixed mortgage averages 6.81%, while the 15-year fixed sits at 6.06%. Adjustable-rate loans like ARMs and HELOCs are still high, tracking closely with the Fed’s moves—or lack thereof.
With housing prices still high, many buyers are sitting on the sidelines
Auto Loans, Tariffs, and the Cost of Living
The car market isn’t catching a break either. New car loans average 7.3%, and used cars spike to 10.9%, according to Edmunds. Rising tariffs on vehicle parts and imports are inflating prices even further, squeezing buyers at every turn.
Even if the Fed did cut rates now, it wouldn’t solve affordability issues overnight. As Danielle Hale noted last month, real change takes time—slashing rates won’t instantly fix years of price surges and wage stagnation.
What’s Next for the Fed?
With no cut in July and tariff-driven inflation looming, all eyes turn to the September FOMC meeting. Until then, markets—and politicians like Trump—will have to wait.
