The Fed is likely to raise interest rates as inflation persists. What that means for consumers — SkimNews
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- The Federal Reserve is expected to raise its target federal funds rate by 0.25 percentage points on Wednesday, its first hike in more than three years, amid CPI inflation at 3.4% annually in August driven partly by higher oil and gas prices.
- Fed Chairman Kevin Warsh has committed to bringing inflation down to the Fed's 2% target, but the move risks a clash with President Trump, who has pushed to lower the federal funds rate.
- Credit card APRs, already above 20%, will rise to record highs once the Fed acts, according to Moody's chief economist Mark Zandi.
- 30-year fixed mortgage rates surpassed 7% for the first time in over a year as the 10-year Treasury yield topped 4.95% last week.
- Average new car loan APRs on 48-month loans are projected to rise roughly 12 basis points following the expected 25-basis-point hike, per WalletHub.
- Savers stand to benefit from higher deposit rates — analyst Mark Hamrick called this 'a potentially overlooked upside' to elevated rates.
Why it matters: Consumers already straining under 3.4% inflation face higher borrowing costs across credit cards, mortgages, and auto loans. With credit card APRs above 20% heading toward record highs and 30-year mortgages already past 7%, the Fed's first hike in three years deepens the squeeze on households — even as Trump publicly pressures the central bank to cut instead.
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