The Federal Reserve may skip rate hike this week. What that means for you

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The Federal Reserve is likely to skip an interest rate hike when it meets this week, experts predict. But consumers may not feel any relief.

The central bank has already raised interest rates 11 times since last year — the fastest pace of tightening since the early 1980s.

Yet recent data is still painting a mixed picture of where the economy stands. Overall growth is holding steady as consumers continue to spend, but the labor market is beginning to loosen from historically tight conditions.

At the same time, inflation has shown some signs of cooling even though it remains well above the Fed’s 2% target.

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Even with a break in rate hikes, “the one thing that remains very clear is that the Fed is nowhere close to cutting rates,” said Greg McBride, chief financial analyst at “Rates remain really high and will stay there for a while.”

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

Here’s a breakdown of how the impact has already been felt:

Credit card rates top 20%

Mortgage rates are above 7%

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

The average rates for a 30-year, fixed-rate mortgage “remain anchored north of 7%,” said Sam Khater, Freddie Mac’s chief economist. “The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated.”

Auto loan rates top 7%

Federal student loans are now at 5.5%

Private student loans tend to have a variable rate tied to Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Deposit rates at some banks are up to 5%

While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.43%, on average, according to the Federal Deposit Insurance Corp., or FDIC.

Average rates have risen significantly in the last year, but they are still very low compared with online rates, according to Ken Tumin, founder of

Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now paying over 5%, according to Bankrate, which is the most savers have been able to earn in more than 15 years.

However, if the Fed skips a rate hike at its September meeting, then those deposit rate increases are likely to slow, Tumin said.

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