Federal Reserve Meeting: Fed Raises Rates Again

Policymakers increased interest rates by a quarter point, to the highest level in 22 years. They also left the door open for further increases, as they continue the fight against rapid inflation.

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By Karl Russell

Jeanna Smialek

Federal Reserve officials raised interest rates to their highest level in 22 years, continuing their 16-month campaign to wrestle inflation lower by cooling the American economy.

Officials pushed rates to a range of 5.25 to 5.5 percent, their highest level since 2001, while leaving the door open to further rate increases in the statement announcing their unanimous decision. Jerome H. Powell, the Fed chair, explained the move in a news conference, but offered few hints about how the central bank was thinking about its next steps.

Here’s what to know about the Fed’s latest decision:

Fed policymakers began to raise rates from near-zero in March 2022 and pushed them up rapidly last year before adjusting them more slowly in 2023, even pausing in June. Because officials think rates are now high enough to weigh on the economy, they have been moving more gradually to give themselves time to see how growth, the job market and inflation data are responding to the shift in policy. “We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt,” Mr. Powell said during his post-meeting news conference.

Economists have recently become increasingly hopeful that the Fed might be able to slow inflation without causing an outright economic downturn, clinching what is often called a soft landing. Inflation has finally begun to subside notably at a time when hiring still remains strong and the unemployment rate is hovering at very low levels. In a nod to that resilience, officials noted on Wednesday that the economy was expanding at a “moderate” pace, an upgrade from “modest” in their June statement. Mr. Powell also noted that the Fed’s staff economists no longer expected a recession later this year. They had previously been predicting one.

Although the slowdown in inflation so far is welcome news, it has been driven primarily not by their policy changes, but by a slow return to normal after years of pandemic-related disruptions across a range of products, from cars to couches. Mr. Powell said that the process of getting inflation back to the Fed’s 2 percent goal has “a long way to go.”

“Inflation repeatedly has proved stronger than we and other forecasters have expected — and at some point that may change,” Mr. Powell said. “We have to be ready to follow the data and given how far we’ve come, we can afford to be a little patient as well as resolute as we let this unfold.”

The Fed projected last month that it would make two more rate increases this year — the one it ushered in on Wednesday, and then a follow-up at some point in the future. Investors and some economists have speculated that officials may hold off on that second rate move in light of the recent slowdown in inflation. “We haven’t made any decisions about any future meetings,” Mr. Powell said. He avoided explaining in any detail what might prompt the Fed to either lift rates or hold them steady, noting that the Fed has time and a substantial amount of data coming before it has to decide on policy again. Policymakers won’t make another decision on interest rates until Sept. 20.

Jeanna Smialek

Key takeaways from the Fed meeting today and the news conference with Jerome Powell, the Fed chair:

• The Fed raised interest rates by a quarter point, as expected.

• Officials left the door open to future rate moves.

• But policymakers were careful not to commit to a pace, extent or plan.

• "We haven’t made any decisions about any future meetings,” Powell said, bluntly and plainly.

• Powell said he still expects the labor market to slow, even though it has been great news that it has been resilient to the Fed's rate increases so far.

• Powell also noted that the Fed's staff economists, an influential bunch, no longer expect a recession later this year. They had previously been predicting one.

• In all, the July meeting showed a Fed that is trying to keep its options open at an uncertain juncture in the American economy: Inflation is finally cooling, but it is too soon to declare victory and officials want to see more proof before they back away from rate increases.

Jeanna Smialek

And that’s a wrap. Powell is done with his news conference, which was an exercise in keeping the Fed’s options wide open.

transcript

The Fed’s monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the American people. My colleagues and I are acutely aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher cost of essentials like food, housing and transportation. We’re highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our 2 percent objective. At today’s meeting, the committee raised the target range for the federal funds rate by a quarter percentage point, bringing the target range to 5-and-a-quarter to 5-and-a-half percent. We are also continuing the process of significantly reducing our securities holdings.

Alan Rappeport

Powell says the Fed is concerned about global food security and is watching food prices following Russia’s termination of the Black Sea initiative that was allowing Ukrainian grain to be exported. He does not think that it will impact Fed policy for now.

Alan Rappeport

Powell says “I think we’ve got a ways to go” to get back to balance in the housing market. He notes that homeowners with low interest rates are reluctant to move, constraining housing supply.

Talmon Joseph Smith

It's also a good time to remember: many large businesses (and homeowners) have steady, low-cost, fixed debt payments locked in, but many smaller firms, subject to variable rate bank loans, have seen the cost of their interest payments spike a great deal.

Emily Flitter

Powell says midsize banks may have reined in credit availability more than banks of other sizes recently. It’s hard to say for sure, but the American Bankers Association’s in-house analysis of midsize banks’ lending grew modestly overall from April through June.

Emily Flitter

One way midsize banks are definitely cutting credit: They’re letting loan-only corporate customers know that their credit lines aren’t going to be renewed. They’re turning their focus to customers that do multiple forms of business with them.

Deborah B. Solomon

While today’s vote was unanimous, Powell notes that there “was a range of views” among the participants. It will be interesting to see the Fed’s minutes three weeks from now, when we’ll get more insight into what the various officials were thinking about today’s rate move.

Joe Rennison

“Ultimately over time we get where we need to go,” said Powell, in response to a question about the rally in stock markets working against efforts to restrict the economy and lower inflation. Powell said that these so-called financial conditions can become dislocated from the Fed’s policy but that overtime they tend to come back together. Reading between the lines, that could spell trouble for the stock market.

Joe Rennison

Powell’s comments appeared to have an impact on the market. The S&P 500 is now roughly 0.4 percent lower for the day, having been as much as 0.3 percent higher for the day when Powell first started talking.

Joe Rennison

Stocks across all three major indices -- the S&P 500, the Nasdaq Composite, and the Dow -- have all given up their earlier gains and have slipped back into negative territory for the day, as Powell urged caution over the economic outlook.

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By: Ella Koeze

Ben Casselman

The bank failures last spring didn’t set off the financial crisis that some people feared. But some economists think the turmoil could still have an economic impact, as smaller banks pull back lending to businesses. That could lead to reduced hiring and investment in the months ahead.

Lydia DePillis

Interesting that Powell said he now doesn’t see the fallout from the banking crisis as distinct from a general tightening in credit conditions. “I can’t separate those anymore,” as he put it.

Emily Flitter

Yesterday, PacWest, one of the most troubled midsize banks left standing, was bought by another California bank. “Things have settled down,” Powell says in response to a question about whether yesterday’s merger shows there’s more trouble in the sector. “Of course we’re still watching the situation carefully.”

Emily Flitter

“I wouldn't use the term 'optimism’ about this yet,” Powell says of the economy’s trajectory.

Lydia DePillis

Chair Powell mentioned the SLOOS, or the Senior Loan Officer Opinion Survey on Bank Lending, which is expected to show that it’s been harder to get a loan when it's released next week. We already know, via the New York Fed’s survey of consumer credit access, that applications for loans have been sinking and rejection rates have been rising.

Jeanna Smialek

Woah, this is news: Powell says that the Fed’s very-influential staff economists are no longer forecasting a recession. They had been for the last several meetings.

Ben Casselman

If you want to get a sense of how forthcoming Powell is being on the Fed’s future plans, this quote gives you a sense: “We’ll be comfortable cutting rates when we’re comfortable cutting rates.”

Joe Rennison

Investors have a higher expectation of rate cuts coming sooner rather than later, betting on two quarter-point rate cuts in the first half of next year.

Joe Rennison

The Dow Jones Industrial Average, a narrow index of just 30 economically sensitive stocks, has rallied back from earlier losses to trade 0.3 percent higher for the day. If that gain holds until the end of the day it would mark the longest streak of daily gains for the index since the 1980s.

Ben Casselman

Powell says that monetary policy is “restrictive,” meaning that interest rates are high enough to slow down economic growth. One interesting effect of cooling inflation is that it will tend to make Fed policy more restrictive, even without further rate increases. That’s because what matters are inflation-adjusted (or “real”) interest rates. As inflation falls, real rates will move higher, putting a further brake on growth.

Ben Casselman

Powell is working very hard here to convince people that the committee hasn’t made a decision on what to do in September. It’ll be interesting to see how Fed watchers interpret that.

Joe Rennison

Much can change over the next two months but as things stand, investors are placing a roughly 20 percent chance on a quarter-point rate increase in September, according to CME’s Fedwatch tool.

Joe Rennison

It can be a fools errand to read too much into financial markets’ immediate moves on days like today. At the moment, stocks have ticked higher and the dollar has nudged lower, in a positive reception to Powell’s comments. But expectations for a further quarter point interest rate increase later this year have nudged upward, which would typically be a more worrying sign for the stock market.

Ben Casselman

Powell notes that “core” inflation, which excludes volatile food and fuel prices, remains elevated, even as overall inflation has fallen substantially. That’s part of why the Fed remains focused on fighting inflation.

Ben Casselman

But Powell doesn’t dismiss the decline in headline inflation entirely. As consumers experience smaller overall price increases, they may become less worried about inflation, which could make it easier for the Fed to bring inflation back under control.

Lydia DePillis

This came in response to a question about how much economic harm is necessary to get from 3 percent inflation down to 2 percent? Experts are starting to call this the “last mile,” noting that it could be the most difficult, and wondering whether the tradeoffs change once the worst of inflation has passed.

Emily Flitter

Banks, anyone? The latest sign that the crisis of confidence in midsize U.S. banks has waned is that it has not yet come up at this Fed news conference.

Jeanna Smialek

Powell calls it a “real blessing” that the Fed has managed to raise rates so much without unemployment popping. He says a softening in labor conditions is still the likely outcome, though, and “the worst outcome” would be to “not deal with inflation.”

Jeanna Smialek

“Is the overall signal one that we need to do more, that we need to tighten further?” Powell says in response to a question. The upshot here is that the September meeting is clearly live, but officials are pretty carefully keeping their options open.

Lydia DePillis

The point of Jeanna’s question is really central: Is good news bad news? Powell’s answer is that good news is good news, but if it’s too good, it might require an “appropriate response for monetary policy.” (Read: Further rate increases.)

Joe Rennison

This really is important. The longer the economy stays strong, the more the Fed has to do to weaken it, raising the risk of something breaking in the economy.

Ben Casselman

Has Barbie been mentioned in a Fed news conference before? What about Taylor Swift? Our own Jeanna Smialek just managed to work both into a question about consumer demand to Powell.

Jeanna Smialek

This was the economic question I was born to ask, Ben.

Ben Casselman

It was a serious question, by the way. Strong consumer demand for services are a big part of the reason the recovery has stayed on track for so long in the face of Fed rate increases.

Jason Karaian

To wit: Last weekend’s domestic box office was the fourth-largest on record, with “Barbie” selling far more tickets than anticipated. (And “Oppenheimer” doing the same, on a smaller scale.)

Joe Rennison

There is a lot of data to come between now and the Fed’s next meeting in September, including two jobs reports and two more consumer inflation reports. “All of that information is going to inform our decision,” on whether or not to raise interest rates again. Powell said he is open to either outcome, spurring the S&P 500 higher as investors welcome the potential for interest rates to now be at their peak.

Jeanna Smialek

Powell says a rate move in September is “certainty possible,” but so is a pause — and that officials have 8 weeks before their next meeting to parse economic data.

Lydia DePillis

A huge question for the Fed — and Fed watchers — is how much of the force of interest rate increases has already been absorbed in the economy, and how much is left to go. Powell notes that the effects have been felt most markedly in housing and investment. Is another shoe dropping soon, which would comport with the dictum that monetary policy takes effect with “long and variable lags”? Or have most of the impacts already filtered through?

Jeanna Smialek

Powell also adds that a soft June inflation report was “welcome” but only one month of data, and says that the Fed will need to see more data. He says officials are looking for moderate growth, and for supply and demand that are coming into balance. “We’ll be asking ourselves — does this whole collection of data” suggest that they need to raise rates further.

Joe Rennison

The stock market appears to be welcoming Powell’s early comments. The S&P 500 has rallied back from earlier losses to trade close to flat for the day. Let’s see if that lasts as Powell begins answering reporters questions.

Jeanna Smialek

“We haven’t made any decisions about any future meetings,” Powell says, referring to when -- or whether -- the Fed will raise rates again.

Ben Casselman

Powell notes that the labor force has been growing. That’s good news for the Fed, because it helps ease the labor shortage without driving up unemployment. It’s also something of a surprise to many forecasters, including at the Fed: Many of them had expected the labor force to remain depressed after the pandemic.

Jeanna Smialek

Powell says that the process of getting inflation back to 2 percent has “a long way to go.” This was expected: The Fed is not ready to declare victory on inflation yet.

Jeanna Smialek

Powell notes that the unemployment rate remains low, but that there are “continuing signs” that balance is coming back to the labor market, including some slowdown in wage growth. That’s the right direction of travel for the Fed: They like a strong job market, but they think that it needs to cool off a bit from today’s hot levels for inflation to moderate.

Madeleine Ngo

The unemployment rate stands at 3.6 percent, only slightly higher than it was before the pandemic.

Ben Casselman

As he has in most recent meetings, Powell opens by arguing that “without price stability, the economy does not work for anybody.” That’s an effort to push back on suggestions that the Fed is choosing to prioritize one side of its mandate (fighting inflation) over the other (maximizing employment).

Jeanna Smialek

“We’ve covered a lot of ground, and the full effects of our tightening have yet to be felt,” Powell says during his news conference opener.

Joe Rennison

Gurpreet Gill, global fixed income macro strategist at Goldman Sachs Asset Management, said that “paradoxically, today’s Fed meeting was one of the most certain and uncertain of the cycle,” noting that the quarter-point increase the Fed administered was widely expected, “however, investors remain divided on whether this marks the last increase in the current tightening campaign”.

Ben Casselman

The Fed didn’t formally update its economic projections after today’s meeting, but the subtle change in the language of the statement signals that policymakers think the economy is a bit stronger now than they did in June. Look for Powell to face questions about whether he thinks that means a “soft landing” is more likely — or if it indicates he is growing more worried about a resurgence of inflation.

Lydia DePillis

As with previous Fed meetings, this one was preceded by calls by Democrats to hold off on further rate increases. Senator Elizabeth Warren of Massachussetts called on Powell to stop raising rates and Senator Martin Heinrich of New Mexico wrote a letter to Powell pointing out that with pandemic relief programs expiring and higher interest rates eroding housing affordability, further tightening was “not warranted.”

Jeanna Smialek

Omair Sharif at Inflation Insights points out that we could get a read on whether the Fed’s thinking about interest rates has changed early in Powell’s news conference. Last month, the Fed chair said that “nearly all” officials thought “some further rate increases” would be appropriate to bring inflation down to 2 percent. Will he reiterate that there’s a widespread forecast for more tightening? Something to keep an eye out for.

Ben Casselman and Jeanna Smialek

The recession was supposed to have begun by now.

Last year, as policymakers relentlessly raised interest rates to combat the fastest inflation in decades, forecasters began talking as though a recession — economic contraction rather than growth — was a question not of “if” but of “when.” Possibly in 2022. Probably in the first half of 2023. Surely by the end of the year. As recently as December, less than a quarter of economists expected the United States to avoid a recession, a survey found.

But the year is more than half over, and the recession is nowhere to be found. Not, certainly, in the job market, as the unemployment rate, at 3.6 percent, is hovering near a five-decade low. Not in consumer spending, which continues to grow, nor in corporate profits, which remain robust. Not even in the housing market, the industry that is usually most sensitive to rising interest rates, which has shown signs of stabilizing after slumping last year.

At the same time, inflation has slowed significantly, and looks set to keep cooling — offering hope that interest-rate increases are nearing an end. All of which is leading economists, after a year spent being surprised by the resilience of the recovery, to wonder whether a recession is coming at all.

Jeanna Smialek and Ben Casselman

For economists and other forecasters, the pandemic and postpandemic economy has been a lesson in humility. Time and again, predictions about ways in which the labor market had been permanently changed have proved temporary or even illusory.

Women lost jobs early in the pandemic but have returned in record numbers, making the “she-cession” a short-lived phenomenon.

Retirements jumped along with coronavirus deaths, but many older workers have come back to the job market.

Technology layoffs at big companies have prompted discussion of a white-collar recession, but the nation’s high-skilled employees seem to be shuffling into new and different jobs.

It looked for a moment like men between about 25 and 44 were not coming back to the labor market the way other demographics had been. Over the past few months, though, they have finally been regaining their employment rates before the pandemic.

Even the person credited with provoking a national conversation by posting a TikTok video about doing the bare minimum at your job has suggested that “quiet quitting” may not be the way of the future — he’s into quitting out loud these days.

That is not to say nothing has changed. In a historically strong labor market with very low unemployment, workers have a lot more power than is typical, so they are winning better wages and new perks.

But the big takeaway from the pandemic recovery is simple: The U.S. labor market was not permanently worsened by the hit it suffered. “Don’t bet against the U.S. worker,” said Adam Ozimek, the chief economist at the Economic Innovation Group, a research organization in Washington.

Joe Rennison

Stock markets slipped on Wednesday morning, as cautious investors parsed mixed earnings reports and prepared for the Federal Reserve to resume raising interest rates.

The S&P 500 fell 0.2 percent ahead of the Fed’s announcement. The index has gained nearly 20 percent since the start of the year, but the rally has slowed this month from its earlier breakneck pace.

The Dow Jones industrial average, a collection of 30 stocks that are intended to track the broader economy, was on course for a 13th consecutive day of gains, posting a small gain in early trading Wednesday.

Stock markets often exhibit caution ahead of major events like Fed meetings, waiting until there is clarity over the central bank’s next move.

Mixed earnings from some of the big technology companies that dominate stock indexes also weighed on the market Wednesday, with Microsoft, which is one of two companies in the S&P 500 valued at over $2 trillion, dropping more than 3 percent.

The technology-heavy Nasdaq Composite index fell 0.3 percent.

Despite the Fed seeking to engineer a gentle economic slowdown, easing inflation by raising interest rates, the economy has proved resilient. Unemployment remains low, corporate profitability has been dented but not destroyed and household budgets are in better shape than expected.

Although inflation has slowed, investors and analysts expect Fed officials to emphasize that their job is not yet over, meaning rates could rise further, or at least remain high for a prolonged period, squeezing companies and consumers.

Investors have in recent days ramped up bets on the Fed raising interest rates by an additional quarter of a percentage point later this year, and will be listening to comments from the Fed chair, Jerome H. Powell, for signs of this in his thinking.

“The U.S. Federal Reserve is not yet declaring a cease-fire with its battle on inflation,” Henk Potts, a market strategist at Barclays Private Bank, noted on Wednesday morning.

J. Edward Moreno

Some of the largest consumer brands in the country have continued to raise prices aggressively this year while raking in large profits, posing a tough problem for the Federal Reserve as it aims to tame inflation.

Coca-Cola, PepsiCo and Unilever have each reported raising prices significantly in the second quarter, from about 8 percent at Unilever to 15 percent at Pepsi. The price increases powered sales growth last quarter, keeping earnings strong even as the volume of products they sold either went down or remained flat versus the same period last year. The companies raised their full-year forecasts for various measures, pushing up their share prices.

The Fed’s main tool to tackle inflation is raising interest rates, which reduces demand for goods and services. But food prices can be particularly sticky: Unlike other goods, food is something that consumers cannot stop buying, and food prices are particularly sensitive to external factors like supply shocks, ingredient prices and geopolitics. Escalating Russian attacks in Ukraine and the recent breakdown of a deal to export grain from Black Sea ports have put pressure on prices for key commodities like corn and wheat.

“The Fed really has no ability to resolve those issues,” said David Ortega, a food economist at Michigan State University.

Prices for consumer goods in the United States have moderated, though inflation is still higher than the Federal Reserve’s goal. Food prices rose 5.7 percent over the year through June, according to the Consumer Price Index.

Coca-Cola said on Wednesday that its profit last quarter rose 33 percent from a year earlier, to $2.5 billion. “In a world with a wide spectrum of market dynamics from inflation to currency devaluation to shifting consumer needs, our business is proving to be very resilient,” James Quincey, Coca-Cola’s chief executive, told analysts on a call.

Unilever, which makes products like Dove soap and Hellmann’s mayonnaise, on Tuesday reported 20 percent growth in profit, to $5 billion, in the first half of the year, compared with the same period last year.

Unilever’s ice cream brands, which include Ben & Jerry’s and Magnum, have become particularly more expensive: Prices were up more than 12 percent while the amount sold was down about 6 percent in the second quarter.

PepsiCo, which makes Gatorade sports drinks, Lay’s potato chips and Quaker Oats, reported this month that its second-quarter revenue grew 10 percent and that its profit doubled, to $2.7 billion, from a year earlier.

The companies have cited a strong labor market, in which wages are growing, as source of increased spending.

“We’ve been able to raise prices and consumers stay within our brands,” Ramon Laguarta, chief executive of Pepsi, said on a call with analysts.

However, Unilever’s chief financial officer, Graeme Pitkethly, told analysts on Tuesday that “sentiment is dropping and consumers are starting to show signs of caution” with more consumers turning to generic brands.

Talmon Joseph Smith

With the Federal Reserve poised to raise interest rates to the highest level in 22 years on Wednesday, Senator Elizabeth Warren called on the Federal Reserve chair, Jerome H. Powell, to halt any further rate increases.

Policymakers are expected to raise rates to a range of 5.25 to 5.5 percent on Wednesday, an increase that could be followed by at least one more this year, depending on incoming data on inflation and the economy.

In a sharply worded letter addressed to Mr. Powell shared with The New York Times, Ms. Warren, Democrat of Massachusetts, warned that continued “wrongheaded” increases in borrowing costs for businesses and households “disproportionately threaten Black workers and their families and risk fully reversing the extraordinary labor market gains we have seen over the economic recovery from the pandemic.”

Citing the notable jump in Black unemployment from a record low of 4.7 percent in April to a 10-month high of 6 percent in June, Ms. Warren, the chair of the Subcommittee on Economic Policy on the Senate Banking Committee, pointed to the common warning from some economists that Black workers are often “the canary in the coal mine” of the labor market. Because racial minorities are typically among the first laid off during a downturn and the last hired during a recovery, a growing range of labor market analysts worry that the uptick in Black unemployment could be a “leading indicator” of more deterioration to come.

Other analysts remain a bit more optimistic, noting the general volatility of labor data since the pandemic and that Hispanic unemployment tilted upward by a similar margin this year (from 4.1 percent to 5.3 percent) before ticking back down.

Still, inflation has fallen to 3 percent, a third of its 9.1 percent peak last year, without the job losses many feared would accompany such a plummet, and many Democratic lawmakers including Ms. Warren are asking the Fed to recalibrate the assumption, embedded in its official projections, that a sustainable curbing of inflation will require higher unemployment.

After a year or so of consensus, differences among policymakers at the Fed have arisen too, and deepened, as they weigh the risks of letting inflation spiral upward again with the potential costs of keeping borrowing costs this high going forward.

“I urge you to maintain your pause on interest rates hikes,” Ms. Warren wrote in her letter to Mr. Powell, “and fulfill your commitment to achieving maximum employment that is as broad and inclusive as possible.”

Joe Rennison and Jeanna Smialek

Investors and economists have become optimistic that the Federal Reserve might successfully slow inflation without plunging the economy into recession, but many are still eyeing a risk that threatens to derail the effort: a tower of dicey-looking corporate debt.

Companies loaded up on cheap debt during an era of super-low borrowing costs to help finance their operations. The Fed has since lifted interest rates and is expected to nudge them up further at its meeting on Wednesday.

The fear is that as debt comes due and businesses still in need of cash are forced to renew their financing at much higher interest rates, bankruptcies and defaults could accelerate. That risk is especially pronounced if the Fed keeps borrowing costs higher for longer — a possibility investors have slowly come to expect.

Tara Siegel Bernard

The Federal Reserve is expected to raise interest rates on Wednesday, the latest in a series of increases that have squeezed the budgets of debt-laden Americans, while rewarding those with money to stash in savings.

The Federal Reserve has already raised its benchmark rate, the federal funds rate, to a range of 5 to 5.25 percent to rein in inflation, which is showing signs of slowing. But prices remain elevated, leading the Fed to keep rates high for a prolonged period of time.

That means the cost of credit cards and mortgages may remain relatively high, making it more difficult for people who want to pay down debt — as well as those who want to take out new loans to renovate their kitchen or buy a new car.

“We were very spoiled for a while with low rates, and that lulled us into a false sense of security in terms of what the true cost of debt can be,” said Anna N’Jie-Konte, president of Re-Envision Wealth, a wealth management firm.

Here’s how different rates are affected by the Fed’s decisions — and where they stand now.

Credit card rates are closely linked to the Fed’s actions, which means consumers with revolving debt have seen those rates rise over the past year — and quickly (increases usually occur within one or two billing cycles).

The average credit card rate was 20.44 percent as of July 19, according to Bankrate.com, up from around 16 percent in March last year, when the Fed began its series of rate increases.

People carrying credit card debt should focus on paying it down and assume rates will continue to rise. Zero-percent balance transfer offers can help when used carefully (they still exist for people with good credit, but come with fees), or you might try negotiating a lower rate with your card issuer, said Matt Schulz, chief credit analyst at LendingTree. His research found that such a tactic often works.

Higher loan rates have been dampening auto sales, particularly in the used-car market, because loans are more expensive and prices remain high, experts said. Qualifying for car loans has also become more challenging than it was a year ago.

“The vehicle market has challenges with affordability,” said Jonathan Smoke, chief economist at Cox Automotive, a market research firm.

The average rate on new car loans in June was 7.2 percent, up slightly from the start of the year, according to Edmunds.com. Used-car rates were even higher: The average loan carried a 11 percent rate in June, down from a recent high of 11.4 percent in March.

Car loans tend to track the five-year Treasury note, which is influenced by the Fed’s key rate — but that’s not the only factor that determines how much you’ll pay. A borrower’s credit history, the type of vehicle, loan term and down payment are all baked into that rate calculation.

Rates on 30-year fixed-rate mortgages don’t move in tandem with the Fed’s benchmark rate, but instead generally track the yield on 10-year Treasury bonds, which are influenced by a variety of factors, including expectations around inflation, the Fed’s actions and how investors react to all of it.

Mortgage rates have been volatile. After climbing above 7 percent in late October — for the first time since 2002 — mortgage rates dipped close to 6 percent in February before drifting back up again to 6.78 percent as of July 20, according to Freddie Mac. The average rate for an identical loan was 5 percent the same week in 2022.

Other home loans are more closely tethered to the Fed’s moves. Home-equity lines of credit and adjustable-rate mortgages — which each carry variable interest rates — generally rise within two billing cycles after a change in the Fed’s rates. The average rate on a home-equity loan was 8.47 percent as of July 19, according to Bankrate.com, up from 5 percent a year ago.

Borrowers who already hold federal student loans are not affected by the Fed’s actions because that debt carries a fixed rate set by the government. (Payments on most of these loans have been paused for the past three years as part of a pandemic relief measure, and are set to become due again in October.)

But new batches of federal student loans are priced each July, based on the 10-year Treasury bond auction in May. And those loan rates have climbed: Borrowers with federal undergraduate loans disbursed after July 1 (and before July 1, 2024) will pay 5.5 percent, up from 4.99 percent for loans disbursed in the year-earlier period. Just three years ago, rates were below 3 percent.

Graduate students taking out federal loans will also pay about half a point more, or about 7.05 percent on average, as will parents, at 8.05 percent on average.

Borrowers of private student loans have already seen those rates climb thanks to the prior increases. Both fixed- and variable-rate loans are linked to benchmarks that track the federal funds rate.

Savers seeking a better return on their money have had an easier time: Rates on online savings accounts, along with one-year certificates of deposit, have reached their highest levels in more than a decade. But the pace of those increases is slowing.

“Consumers now have several options to earn over 5 percent yield on their cash,” said Ken Tumin, founder of DepositAccounts.com, part of LendingTree.

An increase in the Fed’s key rate often means banks will pay more interest on their deposits, though it does not always happen right away. They tend to raise their rates when they want to bring more money in.

The average yield on an online savings account was 4.08 percent as of July 1, according to DepositAccounts.com, up from 1.04 percent a year ago. But yields on money market funds offered by brokerage firms are even more alluring because they have tracked the federal funds rate more closely. The yield on the Crane 100 Money Fund Index, which tracks the largest money market funds, was recently 4.96 percent.

Rates on certificates of deposit, which tend to track similarly dated Treasury securities, have also been ticking higher. The average one-year C.D. at online banks was 4.89 percent as of July 1, up from 1.75 percent a year earlier, according to DepositAccounts.com.

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