March Fed meeting recap: Powell acknowledges that Trump tariffs are already boosting inflation as Fed keeps rates steady

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

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Investors cheered the Fed’s meeting, sending stocks solidly up on the day

• The S&P 500 finished the day about 1.1% higher, while the Nasdaq rallied about 1.4% – both solid performances after several weeks of significant declines.
• Stocks didn’t show the whipsawing effect that they often do following a Fed meeting. 
• Rebounds like the kind we saw today are sometimes followed by a sell off on Wall Street. We’ll see if sellers come back tomorrow and erase today’s “relief rally.”

Stocks are in a “correction” – Here are 5 things you should be doing now to keep your wealth growing over time. 

You could be left waiting if you’re anticipating rapidly descending rates

Refinancing your student loans can help you consolidate into one loan with one monthly payment and one interest rate. You could also lower your interest rate, potentially saving hundreds or thousands of dollars in interest.

While the Fed’s actions could (eventually) get you a lower rate, there’s no guarantee if and when current rates will drop. In the near term, improving your credit score gives you the opportunity for lower rates when you refinance, especially if you took out bad-credit loans. That’s an opportunity you can control.

Federal student loan rates are set by Congress annually and are based on the yield of the 10-year Treasury note. They don’t change immediately when the Fed raises or lowers rates. When it comes to refinancing federal loans, however, tread carefully: By working with a private lender, you’ll lose government-exclusive benefits that come with those loans, including income-driven repayment options and Public Service Loan Forgiveness.

The right time to refinance your student loans is when it makes the most financial sense for you and your goals — regardless of whether the Fed adjusts its target rate. It’ll depend on your interest rate, your timeline and what you can reasonably afford. Just make sure the benefits outweigh the costs to refinance.

Your credit score has more impact on your personal loan rate than the Fed’s actions.

Many consumers pick personal loans for debt consolidation, and for good reason: The average personal loan rate is just north of 12 percent, while average credit card rates are above 20 percent.

Paying off high-interest credit cards comes with the added benefit of lowering your credit utilization ratio, which carries a lot of weight with your credit score. The amount of available revolving credit (such as credit card debt) you’re using has almost as much power to tank — or improve your credit score as paying your bills on time. 

There is a catch: You have to stop or minimize credit card use in the future to maintain a higher credit score. That higher credit score could save you 5 to 10 percentage points on your personal loan rate if you graduate from bad to fair credit or fair credit to good credit. 

With the Fed declining to cut rates today and broader uncertainty around the economy, you might be rethinking plans to buy a home this year. Yet, despite elevated mortgage rates, there are some bright spots for homebuyers:

• Listings are up nearly 17 percent from around this time last year. That means more choices for house-hunters.
• While tariffs could push up home prices and rates, those effects haven’t been felt yet. Buying a house now could help you avoid paying more in the future.
• If you’re in the financial position to buy, there’s no reason to hold off building that equity.

Still, there are reasons to hold off, too. We recently asked experts for the most compelling cases to buy a house in 2025, as well as their take on why you shouldn’t. Here’s what they had to say.

Powell today described two likely paths for interest rates. If the economy remains strong and inflation “does not continue to sustainably move toward 2 percent,” the Fed can keep interest rates higher for longer. If the labor market or economy unexpectedly weakens, Fed officials could reduce borrowing costs. 

Notice that there’s no mention of hiking interest rates here. The bar appears to be very high for that. 

Fed Chair Jerome Powell revealed how he thinks about tariffs: “They tend to bring growth down; they tend to bring inflation up.” He also suggested that Trump’s latest tariffs already appear to be driving some price increases: “We now have inflation coming in from an exogenous source,” Powell said. 

Yet, he doesn’t currently think this economic environment — which economists often call “stagflation” — could be nearly as bad as what happened during the ‘70s and ‘80s. Back then, prices soared almost twice as much as they did in the post-pandemic era, and officials had to hike interest rates to the highest levels on record, which pushed the economy into a recession. 

“I wouldn’t say we’re in a situation that’s remotely comparable to that,” Powell says. “Inflation is still running in the 2s with probably a little bit of a pick up associated with tariffs.”

5 credit card moves when you see economic red flags — before a full-blown alarm

As a former banker, recent data makes me a little nervous for credit card users carrying balances. Since Q2 of 2023, the New York Fed has consistently reported rising credit card delinquency rates. The latest data, from the final quarter of 2024, shows 11.4 percent of credit card balances are delinquent by 90 days or more. Just two years ago, in 2022, seriously delinquent balances were 4 percent lower. 

It’s a 13-year peak with the closest instance being a pandemic-related spike of 10 percent. Banks are already on edge since these delinquency rates are preceded by record high credit card balances, topping $1.21 trillion. Banks lose money if people can’t pay their credit card bills, so high delinquencies are a major red flag for them. 

I saw first-hand how elevated delinquencies impacted credit issuer decisions during COVID — especially when paired with other economic red flags. When banks get spooked, consumers often pay the price in the form of tightened credit standards, higher interest rates or sparse promotional APR offers. 

If your credit card balances are high, don’t wait for the Fed to lower rates to take action. I’ve taken proactive steps with my credit cards to protect myself in the face of economic uncertainty. You can, too: 

1. Crunch the numbers and try to increase your monthly payment toward your debt. 
2. Apply for the balance transfer card before you think you need one. Don’t wait until your card is maxed out or your credit score drops. Keep in mind any time limits to take advantage of the offer.
3. Consolidate high-interest debt with a personal loan. 
4. Avoid adding to your balance by saving for emergencies. 
5. Look into a debt management plan through a non-profit credit counseling organization. 

Concerning circumstances aside, these aren’t bad moves to make with your credit cards anyway. If your finances improve, you’re in a better position should economic red flags become alarms. Should those red flags cease waving, you’ve laid the groundwork for financial success.

Senior Industry Analyst Ted Rossman discusses the U.S. economy and consumer sentiment

Rossman joins CNBC’s The Exchange

The economy is better than people realize despite low sentiment, Rossman says.

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“A good part of it is coming from tariffs,” he said at his post-meeting press conference. But one reason why those inflation projections didn’t rise even more, he says, is because officials saw “weaker growth” as “offsetting” some of it. 

Higher import taxes are considered to be a drag on economic growth because they can disrupt supply chains and harm business’ production capacity. Weaker hiring and profits could also slow the economy, which itself is actually *deflationary.*  

Still, “with the arrival of tariffs, there may be a delay in further progress over the course of this year,” Powell says, referring to getting inflation back to 2 percent.

The stock market – often fickle after a Fed announcement – is holding its gains, at least for now

• After a Fed announcement, it’s not unusual for stocks to do a headfake and maybe even a double headfake in the 30 minutes or so after the announcement.
• This time we’re seeing the market hold on to its earlier gains, at least in the immediate aftermath of the decision to leave rates as they are.
• The market may be taking heart that the Fed still foresees two rate cuts this year, leaving the potential for monetary stimulus in the months to come. 

Here’s who wins and who loses from the latest Fed move.

Here are the most important changes in the Fed’s new Summary of Economic Projections:

• On rates: The median estimate for interest rates remained the same, but that’s masking some material changes in how many rate cuts officials now expect to make this year. Nine officials see two rate cuts in 2025 (down from 10 officials in December), two officials see three rate cuts (down from three officials in December), while no policymaker sees four or five cuts (two projected more than three cuts in December). On the other hand, four officials see one cut, and another four officials see no cuts.
• On inflation and the job market: A touch of stagflation here, but a very mild case. The median estimate of the unemployment rate moved up to 4.4 percent from 4.3 percent, while inflation edged up to 2.7 percent from 2.5 percent. 
• On economic growth: This was the kicker. Policymakers now expect the U.S. economy to grow 1.7 percent in 2025. That’s still solid, but not as robust as the 2.1 percent median estimate in December. 

Whether the Fed raises, lowers or maintains its benchmark fed funds rate, savers can still benefit in today’s high-rate environment

Regardless of the Fed’s future interest rate moves, today is still a good time to take advantage of high annual percentage yields (APYs) on deposit accounts, be it certificates of deposit (CD), savings accounts or money market accounts. This is especially true for savers who are considering locking their stash of cash in a fixed-rate CD. 

If you open a CD today that’s yielding 4.4 percent APY, you’re guaranteed that your money will earn interest at that rate for the next 12 months, even if the Fed decides to lower rates later this year.

Need proof in numbers? My colleague, Karen Bennett breaks down the scenario of how much you can earn in interest with $10,000 saved in a one-year CD in her article: Here’s how much investing $10,000 in a CD right now could earn you in 1 year.

HELOCs are heating up. For almost three years now, the balances on home equity lines of credit have increased as more homeowners opt to tap near-record amounts of equity: an average $311,000 as of the third quarter of 2024, according to CoreLogic.

That’s all been helped by the Federal Reserve, which began lowering benchmark interest rates last fall. That made HELOCs — which have variable rates — more affordable.

There could be more declines in store, too, if the Fed issues another cut sometime this year. Here’s more on the growing HELOC trend.

Top-yielding accounts remain competitive

Since the last Federal Reserve rate decision meeting on Jan. 29, here’s how the top annual percentage yields (APYs) have changed on savings accounts and certificates of deposit (CDs) monitored by Bankrate:

• The leading high-yield savings account rate has decreased slightly to 4.50 percent APY from 4.55 percent APY. 
• The highest five-year CD rate has remained the same at 4.25 percent APY.
• Likewise, the top one-year CD rate has held steady at 4.40 percent APY.

Some of the recent stability in competitive CD APYs could be the result of the Fed holding its benchmark rate steady in January. APYs on high-yielding deposit accounts tend to move in lockstep with changes to the federal funds rate.

Outside the current rate cycle, APYs offered on many deposit accounts are at their highest levels in more than a decade. It remains to be a great time for savers, thanks to deposit account rates above the annual inflation rate, which is currently at 2.8 percent.

• Stocks were up in early trading as investors look for clarity around the Fed’s expectations for inflation in the year or two ahead.
• In recent weeks the market has been up early, only to reverse direction and end up solidly in negative territory as bearish sentiment rules the market for now. 
• Investors also have soured on AI stocks, and these megacap stocks have led the market lower with the Magnificent 7 stocks all down for the year.  

Meantime, the S&P 500 and Nasdaq have hit “correction” territory – here’s what that means for investors.

The Federal Reserve cut the federal funds rate aggressively in late 2024. Mortgage rates responded by going…straight up.

I recently wrote about this disconnect, which suggests that if the central bank simply cuts rates one time this year — as many observers expect — there will be no significant effect on mortgage costs.

Remember, though, that the Fed doesn’t directly set mortgage rates. Instead, they’re usually benchmarked off 10-year Treasury yields, which are dictated by the sentiment of the investors who buy mortgages after they’re packaged up as securities.

On a hopeful note for homebuyers: Mortgage rates have declined in the last few weeks, after holding steady above 7 percent at the start of 2025.

However, it’s still at an elevated level and therefore little consolation for debtors

Let’s start with the good news: The average credit card rate has fallen to its lowest level in two years. The bad news? It’s still quite high (20.09 percent).

Last August, we measured the highest average credit card rate (20.79 percent) since we started tracking it 40 years ago. The average hasn’t fallen below 20 percent since early March 2023. While there’s a good chance that credit card rates will nudge a bit lower in the coming months, it’s unlikely the average will fall below 19 percent this year.

The average credit card balance is $6,580, according to TransUnion. If you make minimum payments at 20.09 percent, you’ll be in debt for 220 months (more than 18 years) and you’ll end up paying $9,590 in interest. Even if that rate falls a full percentage point — probably a stretch for this year — the minimum payment math is still ugly (218 months and $9,079 in interest).

If you have credit card debt, as about half of cardholders do, don’t wait for potential Fed rate cuts to bail you out. Take matters into your own hands to pay down your debt as quickly and cost-effectively as possible. Consider signing up for a credit card with a generous 0 percent balance transfer promotion, working with a reputable nonprofit credit counseling agency such as Money Management International or taking on a side hustle to earn more money to put toward debt payoff.

Credit card rates are high and they’re going to stay high for the foreseeable future. This is most households’ highest-cost debt by a wide margin, so paying it down should be a priority.

McBride: The Fed is ‘in a bit of a no-man’s-land right now’

Federal Reserve meets this week amid economic uncertainty

The Fed looks likely to keep interest rate cuts on hold.

Watch the interview

Markets will be listening to how the Fed is thinking about tariffs and inflation

When Fed Chair Jerome Powell speaks following the central bank’s latest interest rate announcement Wednesday, investors will be listening closely for clues about how the Fed thinks tariffs and other policies may impact inflation and the economy.

Here’s what to watch for:

• Traders are expecting two interest rate cuts in 2025, but the rationale for those cuts is something to pay attention to.
• Investors would likely view interest rate cuts positively if the reason for those cuts is that inflation continues to fall closer to the Fed’s long-term target of 2 percent. But new tariffs present a risk that inflation could spike and the Fed may have to hold rates higher for longer.
• Any sign that the Fed is cutting rates due to a deteriorating economic growth outlook could spook investors and cause stocks to sell off.

Here’s some important advice to remember

When markets are in the red and the news cycle is volatile, it’s probably easier to feel stressed than level-headed. I recently caught up with a few financial planners on what Americans should (and should not) do about it. 

Here’s what they recommend: 

• Save for the future, and resist the urge to panic buy: Before making a big-ticket purchase, ask yourself: Was this an item I was planning to buy, with or without tariffs? If the answer is yes and you’ve already budgeted for it, Bankrate senior economic analyst Mark Hamrick gives you permission to think about buying it now. If the answer is no, he says you might be better off saving more for the future. He reminds us that just 43% of Americans say they would pay an unexpected $1,000 expense with their savings, underscoring the importance of saving any little bit you can.   
• Find the right places to park your cash: Periods of higher inflation make it an important time to ensure you’re earning a decent return on your cash, says Morningstar’s Christine Benz. Historically, investing in financial markets is the best way to beat inflation, even when factoring in volatility, she says. High-yield savings accounts are also offering consumers the highest yields in over a decade,
• Selling is the only way to lock in a loss: Dave Zavarelli, CFP, says downdrafts in the market are a perfectly good time to revisit your asset allocation — especially with an expert. Yet, letting emotions and fear drive your portfolio can often lead to significant opportunity costs, he says. 

“I’m generally a believer of ‘setting it and forgetting it’ when it comes to long-term investing,” Zavarelli says.