Interest rates are expected to start dropping this year, but they may not be the ones Americans are hoping for.
The Federal Reserve kept its short-term benchmark interest rate steady on Wednesday at a 23-year high of 5.25% to 5.5% for a fourth straight meeting and indicated rate cuts are possible down the road, though perhaps not as soon as some economists had predicted.
It’d be a reversal of the aggressive rate hikes over the past couple of years to cool 40-year high inflation and the first rate cut since March 2020. The Fed slashed interest rates at the onset of the pandemic to nearly 0% to help keep the economy afloat as global economies shut down to slow the spread of COVID-19.
While such a pivot on rates would likely boost the stock market more, it’s unlikely to give Americans significant relief on mortgages, auto loans, credit cards and other types of debt any time soon, financial experts say.
“Cutting rates doesn’t mean all rates will shift lower in parallel fashion,” said Sameer Samana, senior global market strategist and investment adviser at Wells Fargo Investment Institute.
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