Federal Reserve is likely to hold interest rates steady in October. Here's what that means for consumers — SkimNews
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- Federal Reserve is expected to leave rates unchanged at its October meeting after a 25-basis-point increase to 3.75%-4% last month, its first hike since 2023.
- FedWatch showed less than a 10% chance of another quarter-point hike at the meeting, while nearly 75% expected at least one hike by year-end.
- Consumer price index rose in September, bringing the annual inflation rate to 3.7%, while oil prices tied to the U.S. war with Iran pushed producer prices higher and Kevin Warsh expressed a commitment to the Fed’s 2% target.
- Aditya Bhave warned that a hold could lead markets to question the Fed’s inflation-fighting credibility, while Heather Long said the election’s proximity would keep the Fed from hiking in October.
- LendingTree puts the average interest rate on a new credit card offer at 23.96%; if the benchmark stays unchanged, variable card APRs are likely to remain near current levels.
- Longer-term borrowing remains costly: average 30-year fixed mortgage rates are close to 7.4% with 10-year Treasury yields near 5%, while Edmunds says many car buyers are taking larger loans and extending repayment terms.
- Federal student loans carry rates fixed for borrowers’ lifetimes, while new borrowers already face higher rates this academic year after May’s 10-year Treasury note auction; savings products, by contrast, continue offering relatively attractive deposit yields.
Why it matters: Variable-rate borrowers are unlikely to see an immediate reset: the average new credit card offer is already 23.96%, and card APRs are likely to remain near current levels if the Fed holds. Housing stays expensive, with 30-year fixed mortgages near 7.4%, while savers retain relatively attractive deposit yields.
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