Fed rates likely to hold steady: Here’s what that means
The Fed is expected to keep interest rates steady at its policy meeting this week despite increasing political pressure from President Donald Trump.
Amid a somewhat softening labor market, inflation pressures and an uncertain geopolitical landscape, futures market pricing indicates virtually no chance of a rate cut, according to CME Group’s report. FedWatch measures.
The Fed’s pause could disappoint Americans who want lower debt payments, according to Matt Schulz, chief credit analyst at LendingTree.
“Even so, interest rates on various types of loans are at their lowest levels in recent years and will likely continue to fall for at least some time,” Schulz said. “This is welcome news, as affordability issues continue to plague families across the country.”
Trump vs. Powell
If the Fed pauses as expected, Trump will likely be the most vocal critic of the central bank’s decision.
The President increased his criticism of the Fed Chairman At the World Economic Forum held in Davos, Switzerland last week, Jerome Powell said in an interview with CNBC that he had narrowed down the list of candidates to replace Powell “to maybe one person.” He is expected to choose someone who tends to cut interest rates more aggressively.
In his speech last week, the president said inflation had been “defeated.” He has also said in previous comments about the Fed that keeping the federal funds rate too high makes it harder for businesses and consumers to borrow money and puts the U.S. at an economic disadvantage compared to countries with lower interest rates.
President Donald Trump gestures during a special speech at the World Economic Forum annual meeting in Davos, Switzerland, on January 21, 2026.
Mandel Ngan | Afp | Getty Images
The Fed’s benchmark determines how much banks can charge each other for overnight lending, but it also has a downward effect on many of the borrowing and savings rates Americans see every day.
Short-term interest rates are more closely fixed. prime rateThis is typically 3 percentage points above the federal funds rate. Long-term interest rates depend more on inflation expectations and other economic factors.
Overall, the impact of the Fed’s actions varies significantly across different loan types.
Mortgages
The average rate for 30-year fixed-rate mortgages was 6.19 percent as of Friday. Mortgage News DailyThe rate, down from more than 7 percent a year ago, was helped in part by Trump’s push to get Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds.
Immediately after Trump announced this plan, interest on 30-year fixed-rate mortgages briefly dropped below 6% at the beginning of this month.
“Mortgage rates have fallen below 6% in recent weeks for the first time in years, but have risen again this past week due to the geopolitical chaos surrounding Greenland,” said Melissa Cohn, regional vice president for William Raveis Mortgage. He said rates could fall again if tensions rise, but “rates are rising much faster than they are falling.”
credit cards
In contrast, most credit cards have variable interest rates, so there is a more direct link to the Fed’s benchmark.
The average credit card interest rate in the USA fell to 23.79% in January, falling to its lowest level since March 2023, following three consecutive interest rate cuts in 2025. According to LendingTree.
“Still, these rates are not going to drop to a level that eases the burden on those who hold the balance,” said Stephen Kates, a certified financial planner and financial analyst at Bankrate.
About 175 million people in the U.S. currently have credit cards, and while some pay off the balance each month, about 60% of credit card users have revolving debt, according to the Federal Reserve Bank of New York.
However, Trump is also trying to step in here. Trump’s call for a temporary 10 percent cap on credit cards could mean interest rates drop significantly for those carrying balances from month to month. But executives at some of the largest banks in the United States JPMorgan Chase CEO Jamie Dimon said such policy “would be an economic disaster.”
vehicle loans
Trump recently said this Car payments, among other expenses, are “coming down.”
Even though interest rates on new car loans have fallen, car buyers are financing larger sums, so the affordability crisis has worsened.
According to Edmunds, the average amount financed for a new car reached an all-time high of $43,759 at the end of last year. The average monthly payment on a new vehicle purchase has reached a new high, as has the share of new car buyers making automatic payments of $1,000 or more.
“The borrowing environment remains highly hostile for auto buyers, who are still dealing with sky-high prices and interest rates that haven’t changed meaningfully despite three rate cuts in the past year,” said Edmunds consumer insights analyst Joseph Yoon.
