Fed meeting recap: Powell says FOMC is ‘in no hurry’ to cut again after Fed holds rates steady

Thanks for following along with our live coverage of the Federal Reserve’s January meeting. For more information on how the Fed impacts you, read more of Bankrate’s Fed coverage. 

The Federal Reserve and your money

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Stocks were fairly placid for a Fed day, a time when they can show notable volatility. At the end of trading, major indexes had declined. 

• Major stock indexes such as the S&P 500, Dow Jones Industrials and the Nasdaq trended lower for most of the day, with a noticeable drop after the Fed’s 2pm announcement, but rallied somewhat to close the day modestly negative. 
• Big tech names including Microsoft, Nvidia and Amazon fell for the day. 
• With this Fed meeting out of the way, investors will now look for future inflation reports to judge how the central bank will act at its next meeting on March 18-19. 

While investors may be getting a bit nervous about inflation, stocks have tended to do well in the year after the Fed’s first rate cut.

The lack of movement from the Fed isn’t likely to affect personal loan rates in the same way that it may affect long-term financing products. Average rates for personal loans are more so affected by overall consumer health and sentiment toward the economy than how the Fed rate moves. People with good and excellent credit borrowers are also most likely to see benefit from personal loan rates trending down.

See more on: Best personal loan interest rates for January 2025.

Auto loan rates have remained stable since the Fed cut rates in December. Bankrate’s data shows that 60-month car loans have stayed between 7.48 percent and 7.53 percent since December’s meeting — and they’re down considerably from the nearly 8 percent average in July 2024. 

With no cut announced during the January FOMC meeting, rates are likely to stay in this range. That said, other factors — such as rising vehicle prices and car insurance rates — will have an impact on your monthly car budget. Interest rates may be evening out, but it still pays to shop for the best loan offer, commit to a large down payment and buy a car under the maximum amount you can afford. 

Chairman Powell responded to my question about risks to the financial system and to households from ever-increasing exposure to cryptocurrency. He noted that the Fed’s main interest in this regard is the safety and soundness of the banking system. 

I was curious whether he would say something about how people should view it as an asset class, particularly now that the Trump administration appears to be leading a push for adoption and acceptance. In a public appearance late last year, he likened the crypto asset class to gold, which he described as being seen as a possible hedge against inflation. 

This time, he stood clear of saying whether it should have a place in portfolios but added that he would welcome further regulation of the asset class. That’s something that would need to come through legislation passed by Congress and signed by the president. 

The news comes on the heels of both President Trump and the first lady launching their own cryptocurrencies in the days before Trump’s inauguration. 

Last year’s Federal Reserve cuts did little to help mortgage rates — and today’s decision might not help, either.

That’s because fixed-rate mortgages tend to track the 10-year Treasury yield, which has climbed in recent months on concerns ranging from rising government debt to the new administration’s potentially inflationary plans.

Not long ago, experts projected 30-year mortgage rates to slide under 6 percent this year. Yet since September, they’ve steadily tracked up, averaging over 7 percent in the last five weeks.

“It was not supposed to happen this way,” Ken Johnson, of the University of Mississippi, tells Bankrate.

Where do mortgage rates go from here? Our chief financial analyst Greg McBride recently made predictions for 2025. Check out his annual forecast here.

Translation: Officials don’t want the job market to cool any more than it already has

Officials were more focused on inflation today, but make no mistake, the Fed doesn’t appear to want the job market to cool more than it already has. 

Powell said interest rates are “well positioned” to handle the Fed’s twin goals of maximum employment and later added that the Fed doesn’t think the labor market is contributing to the lack of progress on inflation. 

The message I walked away from the Fed’s meeting with is: Officials seem to think they just need to give higher interest rates more time to do their job. 

Here’s a key quote from Powell: “If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than expected, we can ease policy accordingly.”

In the last several months, HELOC rates have become more affordable following the Federal Reserve’s rate cuts in 2024, making it more palatable for homeowners to get cash out of their homes. As of today, Bankrate’s average HELOC rate is 8.26 percent — its lowest level in almost two years. 

For HELOC rates to stay on that downward path, however, inflation would need to cooperate for the Fed to restart cuts.

“The Fed cut benchmark interest rates a total of one full percentage point in the last few months of 2024 and this has helped bring home equity rates lower,” says our chief financial analyst Greg McBride. “But to see further, meaningful declines in home equity rates, inflation will need to moderate enough to make the Fed comfortable resuming interest rate cuts.” 

Top-yielding accounts remain competitive

Since the last Federal Reserve rate announcement on Dec. 18, 2024, the top yield for savings accounts as tracked by Bankrate decreased from an annual percentage yield (APY) of 4.85 percent to 4.75 percent APY, as of Jan. 27. That mere decline of 10 basis points, or a tenth of a percentage point, might be an evident sign that the lowering of interest rates is leveling off as the Fed faces uncertainty as to how it will reverse the rise of inflation, currently at 2.9 percent (the Fed’s target is an even 2 percent).

Halting the drop of interest rates — be it over uncertainties stemming from rising inflation, a new presidential administration, geopolitical or economic factors — might be a disadvantage for Americans looking to borrow cash for a down payment on a house. But for those looking to grow their savings, there are many opportunities to secure a high yield on a variety of deposit accounts.

As of Tuesday morning, it’s possible to find at least one money market account yielding 4.75 percent APY. 

Bottom line: Between 2022 and 2023, the Fed raised rates 11 times for a total of 525 basis points, keeping the target range at 5.25-5.5 percent through Sept. 2024. But over the past four months, the Fed has lowered rates a total of 100 basis points, or a full percentage point. Despite such sheer drops in rates yields on deposit accounts are still generally at their highest levels in more than a decade. 

As inflation flirts near 3 percent, any yield earned above that level will help you preserve your purchasing power. Here’s why now is still a great time to have your money in a high-yielding savings account.

When asked whether a March interest rate cut is still on the table, Powell says the data is currently telling the FOMC that it “does not need to be in a hurry.” 

“The economy is strong, the labor market is solid. Downside risks to the labor market appear to have abated, and we think disinflation continues on a slow and sometimes bumpy path.”  

Investors are already taking note. Market participants now see a 78 percent chance that the Fed will hold rates steady again in March, up from 50 percent a month ago, according to CME Group’s FedWatch tool. 

Powell says the FOMC will need to let President Trump first articulate his immigration, trade and tariff policies before making any adjustments to monetary policy. 

“This is no different than any other set of policy changes at the beginning of an administration,” Powell said. “We’ll patiently watch and understand and not be in a hurry to get to a place of understanding of what our policy response should be until we see how it plays.” 

First question in the Fed’s post-meeting press conference: Chair Powell gets asked about whether he’s had contact with President Donald Trump after the president said interest rates should come down immediately (“I have not,” Powell said.)

Declining to address Trump’s specific comments, Powell then said: “The public should be confident that we will continue to do our work as we always have, focusing on our tools to achieve our goals and really keeping our heads down and doing our work. And that’s how we best serve the public.”

While Chairman Powell is always pressed for details and explanations in his scheduled news conferences, this official FOMC statement appears to be one of the shorter ones we’ve seen.

At 259 words, this reflects policymakers’ desire to keep their options open amid so much uncertainty, not the least of which is the potential impact of fiscal policy, or moves taken by the Trump administration and the GOP-led Congress.

The Federal Reserve decided to delay more rate cuts for now and keep interest rates unchanged at its first meeting of the year, giving themselves time to assess whether inflation is cooling and how President Donald Trump’s policies might impact the U.S. economy. 

Some highlights:

• The decision means the Federal Open Market Committee (FOMC) will keep its benchmark federal funds rate at 4.25-4.5 percent, a target range last seen in early 2023. Before then, rates hadn’t been this high since 2007. 
• In their post-meeting statement, officials said the labor market “remains solid” and the unemployment rate has “stabilized.” Policymakers also deleted a sentence that said inflation has made progress toward their 2 percent goal. 

Here’s what it means for you: Rates on many of the borrowing costs consumers pay — ranging from credit cards and auto loans to home equity lines of credit (HELOCs) and adjustable-rate mortgages — will likely stay steady in the coming weeks. Savers, meanwhile, will still be able to take advantage of the highest yields in over a decade if they park their cash in a high-yield savings account.

Bottom line: Interest rates are not coming down as quickly as they surged. Continue paying down high-interest credit card debt, compare offers from multiple lenders if you need to borrow right now and consider refinancing if a money-saving opportunity presents itself. 

Here’s what the Fed announced at its January meeting

Fed officials are giving themselves time to assess whether inflation is cooling and how President Donald Trump’s policies could impact the economy.

Read more

Why haven’t credit card rates come down more?

The Fed has cut rates by a full percentage point (100 basis points) since September 2024, yet the average credit card rate has only fallen 65 basis points from a record 20.79 percent on Aug. 14, 2024 to 20.14 percent at present. What gives?

There’s a lag

While the standard industry formula is to calculate credit card rates based on the Prime Rate plus a margin set by the card issuer, lenders don’t always use the Prime Rate on the same date. For instance, some apply the Prime Rate on your statement date. Other times, it’s the first of the month or the last of the month. Sometimes it’s the highest Prime Rate in the past 90 days. Or it’s only updated on a specific date once a quarter. In a falling rate environment like the one we’re in now, the longer the lag, the more slowly your rate will come down.

We measure new customer offers

Fed rate changes typically pass through to existing cardholders, but card issuers have more latitude to set rates on new customers. Our weekly sweep of 111 popular cards offered by the 50 largest U.S.-based credit card issuers evaluates rates charged to new customers.

For example, if a card has an annual percentage rate equivalent to Prime + 12 percentage points, that’s a 19.50 percent APR right now. If the Fed were to cut by a quarter-point but the issuer still wanted to charge 19.50 percent, it would be easy for them to update the new customer terms to Prime + 12.25 percentage points. Several have done this in recent months. Changes to existing customers require an additional notice period and only pertain to new purchases.

The path forward

Credit card rates aren’t likely to move much in 2025. Bankrate’s chief financial analyst, Greg McBride, CFA, forecasts an average rate of 19.80 percent at year’s end. That’s based on his estimate that the Fed will implement three quarter-point cuts in 2025, and it acknowledges that, because of the aforementioned factors, the national average won’t decline as much as the federal funds rate. So take matters into your own hands to pay down your debt as quickly and cost-effectively as possible, perhaps by signing up for a balance transfer card with a generous 0 percent interest promotion.

When the Fed keeps rates steady, it can potentially open a few doors for investors. Here’s a quick guide on what to keep in mind:

Tech and growth stocks: Technology stocks tumbled in a Monday sell off, but usually, steady rates are like a green light for tech and growth stocks. Why? Because companies are able to spend more money on expansion and research projects. Investors often prefer tech stocks when rates stabilize (or are cut) because predictable borrowing costs make it easier for businesses to grow without rising interest eating into profits.

Fixed income: Rate stability means short-term bonds can offer competitive interest payments with less inflation risk. Longer-term bonds become more vulnerable and less attractive when inflation remains high. This makes shorter-term bonds and floating rate bonds particularly attractive. 

Energy and commodities: When rate cuts are on hold and inflation just won’t seem to go away, physical precious metals — think gold and silver — often provide good portfolio protection and act as a hedge against rising prices. You can also invest in these metals in the form of exchange-traded funds (ETFs) or stocks of companies that are involved in precious metals, like mining companies, metal refiners or suppliers. 

Cryptocurrencies: With the Fed potentially pausing rate cuts and President Donald Trump signing a recent crypto executive order, you may be wondering how you can get in on the crypto action. But pause for a second and remember that investing in cryptocurrencies is extremely risky. The regulatory clearance of spot Bitcoin and Ethereum ETFs has made investing in crypto more accessible but not necessarily less risky. Also, crypto prices have proven to be impacted by the same directional sentiment that impacts stock market investors. 

Bottom line: Just because rate cuts might be on pause doesn’t mean your diversification strategy should. Different sectors react differently, so mix it up and spread your investments across various sectors for the long haul. Strong companies with solid fundamentals will drive returns over time, regardless of rates.

If you’ve been holding out hope for Federal Reserve cuts to help lower mortgage rates, you might be disappointed. Despite three cuts last year, mortgage costs have actually increased, and the median national home price remains high — $404,400 as of December, according to the National Association of Realtors.

Given those realities, you might not want to wait out the Fed this year, especially if you have good credit, a steady income and enough saved for a minimum down payment. Here’s our principal writer Jeff Ostrowski’s step-by-step guide to buy a house in 2025.

Locking in a fixed APY can be beneficial in a falling-rate environment

Rates of return on competitive certificates of deposit (CDs) tend to go up when the Federal Open Markets Committee (FOMC) raises rates — and in turn, they decrease when the Fed cuts rates. As such, we’ve seen annual percentage yields (APYs) on various CDs decline, both leading up to the Fed’s 2024 rate cuts and in the weeks that followed.

As the following table illustrates, the highest APY on one-year and five-year CDs has come down slightly since the Federal Reserve’s latest rate cut on Dec. 18. 

Conversely, the highest APY available on a two-year CD has inched up slightly — which goes to show, rate increases aren’t unheard of at this time.

In all, when comparing the highest APYs on eight CD terms between three months and five years, Bankrate found APYs decreased an average 72 basis points between the middle of January 2024 and the present. While APYs have come down somewhat, locking in a fixed-rate CD now guarantees you’ll earn that same APY throughout its term, regardless of whether rates or new CD yields decrease further.

While investors are all but certain that the Fed will stand pat on interest rates, stock indexes are mostly muted. 

• Major stock indexes are mixed, with the S&P 500 and Nasdaq lower and the Dow Jones Industrials somewhat higher. 
• The Nasdaq is being led lower this morning by the Magnificent 7 tech stocks, including Apple, Microsoft, Nvidia, Amazon and Alphabet. 
• Even with no change in rates this time, investors will be looking for clarity on the future direction of rates from the Fed’s announcement, which could impact stocks after the announcement. 

Here’s how the Fed’s moves affect stocks and cryptocurrency.

The Fed impacts your finances, but you can’t depend on them to fix your finances

When it comes to your finances, sure, keep an eye on what the Federal Reserve decides to do with rates and understand what those decisions mean. But don’t count on the Fed’s announcements to radically change your financial situation today. Instead, make a holistic plan for your credit cards and finances overall:

• Pay off any high-interest credit card debt you have. The Fed isn’t going to dig you out of that hole with a rate-cut shovel. Consider a balance-transfer card or debt-consolidation loan if you need some help.
• Work on your credit score. No matter the Fed’s rate decisions, your best protection against high interest rates is an excellent credit history. Having a high credit score puts you in an ideal position to secure the best loan terms available when borrowing costs are expensive.
• Make sure your money is working for you in a high-yield savings account. The Fed’s rate changes impact the APYs of these accounts, so the returns have declined lately thanks to the Fed’s recent cuts. Even so, it literally pays to put money in a HY savings account, so don’t miss out.
• Take stock of your housing situation. Mortgage rates aren’t dropping rapidly, so you may understandably feel stuck. But if a new job opportunity or better life situation presents itself, don’t let it get away out of the fear of higher mortgage rates alone. Crunch some numbers and don’t let hope for something better later prevent you from taking advantage of the right thing today.

The Fed is merely one aspect influencing your personal finances, alongside Congress, the president, the U.S. economy and more. Focus on what you can control and take financial steps that serve you well, regardless of the way the winds are blowing at the Fed. 

The Fed is expected to keep interest rates unchanged less than a week after President Donald Trump said he’d “demand that interest rates drop immediately.” 

“I think I know interest rates much better than they do, and I think I know it certainly much better than the one who’s primarily in charge of making that decision,” Trump said last Thursday from the World Economic Forum’s annual meeting in Davos, Switzerland. Later, from the Oval Office, he said he plans to speak with Fed Chair Jerome Powell (whom he appointed in 2017) “at the right time.” 

His comments might feel familiar to Fed watchers — and the chief central banker himself, whom Trump referred to as “an enemy” and “a golfer who can’t putt” during his first term.  

Trump is not the first president to comment on Fed policy. Fed chairs throughout history have clashed with Harry Truman, Lyndon B. Johnson and Richard Nixon. Former Chair Paul Volcker wrote in his memoir that even Ronald Reagan tried to dissuade him from raising interest rates. Since the Clinton Administration, though, presidents have appeared to follow an unspoken code, remaining tight-lipped on monetary policy. 

Still, what’s clear is Trump might thrust the Fed into a spotlight that it doesn’t want — in addition to potentially thwarting the Fed’s efforts to cool inflation. 

• Can Trump fire Powell? During his first term, Trump reportedly explored firing Powell. Powell said in November that Trump firing him is “not permitted under the law” and that he wouldn’t leave if Trump asked him to, though legal experts admit that firing a Fed chair is a murky area because there’s no historic precedent. 
• Shaking up who sits on the central bank: The most likely path is that Trump will be able to replace Powell when his position is up in 2026. He’ll also get the chance to pick a vice chair for supervision and to fill Fed Governor Adriana Kugler’s spot when her term expires in January 2026. Board members have a permanent voting position, meaning they’re influential people for the president to have a hand in selecting.
• Putting the Fed in an uncomfortable position: For now, the Fed looks like it might just be caught in the middle of a clash it doesn’t want. Vice Chair Michael Barr already stepped down from his role as the head of banking supervision, citing that “the risk of a dispute over the position could be a distraction from our mission.” Powell will likely be under pressure to prove that it isn’t bending to political pressure. (Another interesting nugget: During Powell’s first term as Fed chair, he met with lawmakers across both sides of the aisle more frequently than any other Fed chair. Experts speculate that it’s part of his strategy to form alliances with the very lawmakers responsible for granting the Fed its independence). 

Powell said that the Fed’s decision to cut interest rates a third time in December was a “closer call.” Cleveland Fed President Beth Hammack dissented against the decision, preferring to keep interest rates steady. Three other officials — presumably those who didn’t have a vote on interest rates last year — appeared to feel the same way.

Since then, we’ve also learned that “almost all participants” thought that hotter inflation had become a greater concern, while “some participants” noted that there was “merit” to keeping interest rates unchanged. 

Here’s the latest on how many times the Fed is projected to cut rates:

• The Fed’s estimates: The majority of officials on the FOMC are penciling in two rate cuts for 2025, according to their latest update in December. Just five thought the Fed would cut interest rates even more than that this year — a massive recalibration from the 17 officials who expected even lower rates back in September.  
• Wall Street: Investors are expecting two cuts this year, according to CME Group’s FedWatch tool. Yet, bond yields across the curve have increased, an environment that typically signals elevated inflation and higher-for-longer interest rates. 
• Bankrate’s Greg McBride, CFA: McBride is penciling in three cuts for 2025, according to his 2025 interest rate forecast. 
• Bottom line: No matter whose forecast, the interest rates would still be at a decade-plus high. 

What do higher interest rates mean for borrowing costs?

Interest rates are expected to edge lower, but only modestly, in the year ahead.

Learn more

It’s time to get ready for the Federal Reserve’s first meeting of 2025. The rate-setting Federal Open Market Committee (FOMC) doesn’t look like it’s going to cut interest rates a fourth consecutive time when it wraps up its two-day meeting today. But Fed watchers are going to be looking for clues that might indicate just how long the Fed plans to sit on the sidelines. 

At this point, though, even U.S. central bankers might not know. 

Here’s what to watch at today’s decision:

• Inflation has been dicey, and the U.S. economy looks stable: Officials want to know whether inflation’s route to 2% is on a detour — or indefinitely derailed. The latest data hasn’t been so positive, with prices heating up for a third straight month to 2.9 percent. The Fed said in December that they plan to take a much more cautious approach with interest rate cuts, penciling in only two rate cuts for this year. 
• President Donald Trump’s policies could make it harder for the Fed to defeat inflation: As policymakers take a step back from rate cuts to assess inflation, economists say Trump’s economic policy playbook (lower taxes, deportations and tariffs) could potentially reignite inflation. Powell said in December that some policymakers had boosted their inflation forecasts because of it.
• Trump is also back to commenting on Fed policy: Old habits die hard for the chief executive, who said in comments during his first week back at the White House that he would demand that interest rates drop “immediately.” Powell will likely stick to his usual script, refraining from commenting on Trump’s critiques and instead pointing to economic fundamentals. The best thing you can do when you fear that your independence is under attack is explain your decision making “as carefully as you can,” Bill English, the FOMC’s former director of its Division of Monetary Affairs, told me in a recent interview. 

What to watch at the Fed’s January meeting

Americans got a taste of the rate cuts they were craving last year. It might be a while before they see any more.

Read more