Market Update: Fed holds steady on rates, sees rates low through 2023
Quick summary of the Fed’s September meeting:
As was widely expected, the Federal Reserve voted to leave interest rates unchanged at its September meeting as it continues to aid the recovery from the pandemic-related recession, leaving the Federal Funds rate at or near zero.
In its policy statement the Federal Reserve Open Market committee also clarified that it believes the pace and progress of the recovery will require rates to remain low through 2023. Through these updates, chairman Jerome Powell communicated that the he and the Fed board will remain patient as they seek to support the economy in the months and years ahead.
The Fed also provided insight into some of the economic conditions they would like to see before potentially raising rates (often referred to as ‘forward guidance’). These included the labor market recovering to pre-Covid 19 levels of unemployment and inflation rising to meet its new target of 2 percent or above.
What it could mean for you:
- Rates to remain low, making it a great time to purchase or refinance
- The Fed’s continued efforts to support the financial system through bond purchases is likely to help keep mortgage rates low. Today’s historic low rates make now a great time for a mortgage review to see if you could save money each month.*
- Rates for credit cards, other borrowing to remain low
- Since most credit cards have a variable rate, the Fed’s moves to cut rates over the last year have led credit card rates to drop to an average of 15.99%, down from a high of 17.85%. Rates for personal loans and car loans are likely to follow suit.
- While borrowers benefit, savers won’t be helped
- Though the Fed doesn’t have direct control over deposit rates, they do tend to be correlated to their policy moves. At present the average savings account rate is a mere 0.05%, at some of the largest retail banks, according to the FDIC.
* Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Guaranteed Rate, Inc. for current rates. Restrictions apply.