The Federal Reserve's steadiness prevails over pressure, keeping interest rates unchanged despite significant political nudging.
According to CNBC, on Wednesday, June 18, 2025, the Fed declared it would maintain interest rates at current levels. This move defies President Donald Trump's persistent demands for a rate cut, set against a backdrop of economic ambiguities like tariffs influencing inflation.
The president argued that high borrowing costs hinder businesses and consumers from accessing cash, straining the economy. Despite this, the Fed's decision ensures the federal funds rate will continue affecting borrowing and savings rates across the nation.
Notably, the unchanged rates come after hikes in 2022 and 2023, which led to quick surges in consumer loan rates, such as credit cards and auto loans. Although there were three rate cuts in 2024, consumer borrowing rates remain lofty.
Mortgage rates hover near 7%, with many home equity lines of credit breaching double-digit interest rates. The average credit card rate exceeds 20%, directly impacting consumer wallets.
While borrowing costs rise, savers benefit from superior returns on savings and money market accounts. These options offer inflation-beating performance, providing retirees and prudent savers with income growth opportunities.
Credit card interest rates are just above 20%, close to last year’s peak, with any relief postponed until at least September 2025. In 2024, banks drove these rates to record highs, and many issuers plan to maintain them.
The auto loan sector feels the strain of these high rates, with the typical five-year new car loan at 7.3% in May 2025. Used car loans approached 11%, near historical highs, compounded by tariffs on imports inflating car prices.
According to Ivan Drury, Edmunds' director of insights, the car market appears inhospitable. "Car buyers are struggling and financing a new vehicle is becoming cost-prohibitive for more shoppers," Drury emphasized.
Rising mortgage rates, linked to Treasury yields and the broader economy, cap opportunities for homebuyers. The average 30-year fixed-rate mortgage sits at 6.91%, with a 15-year at 6.17%, dampening the housing market enthusiasm.
Adjustable-rate mortgages and home equity lines maintain high stakes, driven by the prime rate. Federal student loan rates remain fixed, with a slight decrease planned at the end of June 2025. "I don't see any major changes coming soon," said Matt Schulz, LendingTree's chief credit analyst, regarding this summer’s homebuying market. "Expect rates to remain relatively high."
Yields on CDs and high-yield savings accounts have declined from last year's peaks but remain attractive. "Shopping around for high-yield savings accounts... can be one of the best financial moves to capitalize on current rates," Schulz advises.
The federal monetary landscape remains precarious, with tariffs potentially influencing inflation. Greg McBride, Bankrate’s chief financial analyst, voiced concerns over the uncertainty poised to impact future inflation reports.
"With borrowing rates high, and mortgage rates near 7%, Americans are feeling the strain," McBride explained. Yet, he reminded that savers enjoy returns on top-tier accounts that outperform inflation, rewarding disciplined savings habits.