If you have tried to finance a car, remove a mortgage Or repay the credit card debt, you have probably noticed that the loan costs are still expensive. After the federal reserve reduced interest rates three times last year, many of us hoped for cheaper credit in 2025.
But interest rates are not likely to move anytime soon.
The American central bank meets eight times a year to assess the health of the economy and fix monetary policy, mainly by changes in the rate of federal funds, the reference interest rate uses US banks to lend or borrow money overnight. At its next meeting from May 6 to 7, the Fed is expected To leave borrowing rates alone for the third consecutive time.
The president of the Fed, Jerome Powell, remains firm to monitor the conditions of the labor market and the pressures of inflation before making cuts. Despite the pressure of the White House to reduce rates, there is too much uncertainty about the impact of the Trump administration’s economic agenda, as price and the government's strike.
In the meantime, American households are Climb expenses in the middle of fears of a recession. Economists fear that price will come more inflationary pressures. Investors reduce their losses in a plunging stock market. There is a great concern about employment, taxesPrice, social programs and almost everything else affecting our financial subsistence means.
Even if the Fed holds stable interest rates next week, its tone and its messaging have a huge impact on the markets. Any discourse on risk or uncertainty can scare investors and cause a chain reaction in the economy.
Financial experts and market observers spend time inflation and the labor market. Indeed, the official “mandate” of the Fed is to balance the price stability and maximum employment.
“The Fed monetary policy will depend on what side of their mandate, their inflation or its job is the most distant from the target,” said Matthew MartinMain American economist at Oxford Economics.
Some economists expect the Fed to stay on the sidelines until the end of this year, while others are planning a drop in rates this summer.
Generally, when inflation is high and the economy is over -off, as it was at the beginning of 2022, the Fed increases its reference interest rate to discourage loans and reduce the money supply. When unemployment is high and the economy is low, the Fed decreases its reference rate, allowing banks to facilitate financial pressure on consumers and make it less expensive to buy large ticket items by financing and credit.
