Analysts expect the Federal Reserve to keep interest rates the same. This move comes as new tariffs begin to take effect. Experts think the economy will stay bumpy until the second half of the year.
The Fed’s interest rate is between 4.25% and 4.5%. It affects how much people pay for credit cards, cars, and personal loans. Credit card rates are still above 21%, but car loan rates have dropped slightly. Home loan rates don’t follow the Fed rate as closely. They change more based on what the government pays to borrow money, and those rates are still high.
What’s Next for the Federal Reserve?
Most investors think the Federal Reserve won’t cut rates until July. They believe it will wait until the economy shows more signs of slowing down.
One Fed member said the price rise from tariffs may not last long. He wants to lower rates sooner. Trump agrees. He again pushed for rate cuts after a strong jobs report last week.
But most Fed leaders want to wait. They say they need to see real weaknesses in the job market first. Hiring has slowed, but layoffs are still low. The Federal Reserve will likely hold steady and keep watching the data.
Ed Yardeni, who runs Yardeni Research, believes the Federal Reserve should wait before moving. He says the key is whether inflation stays high or unemployment starts rising. Right now, he thinks rising costs are the bigger issue, not job losses.
He also thinks the market will stay unstable until later in the year. But he expects the administration to ease up on tariffs as the election gets closer. Yardeni said, “Republicans won’t want voters angry about high prices next year.”
What’s Happening with the Stock Market?
Michael Antonelli from Baird says stock prices will likely stay where they are unless something significant changes. The impact of the tariff move has faded for now, but investors waiting for a substantial trade deal may have to keep waiting.
Still, small investors—everyday people—are keeping the market from falling. Bank of America says these buyers have been investing for 21 weeks, the longest streak they’ve seen.
Antonelli believes these retail investors matter more than people think. “Americans keep buying because they need to plan for retirement,” he said. “They may not be in the spotlight, but they play a big role in the market now.”
The Federal Reserve monitors the situation as inflation and trade policies shape the economic outlook.