Buffalo, NY (WBEN) It was no surprise to BankRate's Mark Hamrick, a regular WBEN contributor, that the Federal Reserve elected to keep interest rates where they are for the time being.
The Fed decided Wednesday to forgo another increase in its benchmark interest rate, leaving it at about 5.1%. The pause followed 10 straight hikes in 15 months — the fastest series of increases in four decades.
Hamrick tells WBEN the Fed did exactly what those who follow monetary policy closely expected it to do. "I think more important here, the Federal Reserve signaled that it's likely not guaranteed, but likely that it could be raising interest rates in the coming months," says Hamrick.
For borrowers, Hamrick says this means the relatively high cost of borrowing will essentially remain as is. "Things like mortgage rates will remain elevated, the average on a 30 year fixed rate mortgage now just under 7%. That's up about 4% from the lows during the pandemic when we were in the 3% range," explains Hamrick. It also means if you have credit card debt, it's in your best interest to pay that down before that additional interest hits in that billing cycle.
There's good news for savers, says Hamrick. "The returns on savings are the best we've seen over a decade," notes Hamrick. He says those with high yield accounts have an annual yield of up to five percent.
Hamrick says the Fed will be looking at future trajectories of inflation, with the Consumer Price Index up four percent. "Over the past year, that's well down from the high of 9.1%, this time a year ago, but still above the Federal Reserve's target of 2%. And, of course, economic growth of the still relatively robust job market," adds Hamrick.
The next Fed meeting is in late July.
