Federal Reserve Holds Rates Steady this Time

UPDATED: Feb 25, 2020

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The Federal Reserve Board changed course at its most recent meeting yesterday, June 25th. The Fed held its target for the federal funds rate at 2.00 percent. The federal funds rate is the rate consumers pay on credit cards, home equity lines of credit and automobile loans.

Yesterday’s widely expected decision to hold rates steady breaks a string of seven consecutive rate reductions over the past eight months.  The Fed’s last statement noted “uncertainty about the inflation outlook remains high.” This comment had many experts believing the Fed may be done cutting rates, and it turns out now to be the case indeed. This meeting’s statement noted “upside risks to inflation and inflation expectations have increased.”

The federal funds rate is an overnight bank lending rate that affects rates on various types of loans such as variable-rate mortgages and credit card rates, among others. The rate may also impact rates on various investment and insurance products offered by life insurance companies.

 

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