The Federal Reserve kept interest rates at a 23-year high and signaled no immediate plans to cut interest rates, suggesting that officials are having to recalibrate monetary policy as inflation has stayed stubbornly higher than expected.

For nine months now, the Federal Open Market Committee (FOMC) has kept its key benchmark federal funds rate in a target range of 5.25-5.5 percent, the highest since 2001. The latest decision matters for consumers because it means the pricey financing rates they’re paying — on everything from credit cards and auto loans to mortgage rates and home equity loans — are going to keep sticking around.

“In recent months, there has been a lack of further progress toward the committee’s 2 percent inflation objective,” officials wrote in their post-meeting statement. “The committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year.”

To be sure, the pain of higher interest rates was never expected to disappear this year, though U.S. central bankers hoped that they might be able to take some of the edge away. At the end of 2023, Fed officials faced an economically golden scenario: slowing inflation and a resilient job market. They signaled plans to cut interest rates three times in 2024 and stayed hopeful about it even as inflation flashed warning signs of remaining firm.

Those hopes are now slipping away. Consumer prices rose 3.5 percent from a year ago in March, reflecting no improvement for 10 straight months, Bureau of Labor Statistics data shows. Excluding food and energy prices, meanwhile, so-called core inflation has been at a holding pattern of 3.8 percent since February. Some key household staples are even moving in the wrong direction, such as car insurance and gasoline.

Fed Chair Jerome Powell indicated that the latest data hasn’t given officials the confidence they need to begin cutting interest rates. And for now, with the labor market and economy still resilient, Fed officials don’t have a clear reason to move rates in either direction.

Fed officials are likely going to need more time before feeling confident that they can cut interest rates without fueling more inflation. And for now, with the labor market and economy still resilient, Fed officials don’t have a clear reason to move rates in either direction.

“The timing of when the Federal Reserve begins to cut interest rates is up in the air – and in an indefinite holding pattern,” says Greg McBride, CFA, Bankrate chief financial analyst. “Until we see renewed evidence that inflation is consistently easing, we’re no closer to the Fed cutting rates.”

The Fed’s rate decision: What it means for you


For the savers who’ve been taking advantage of the highest yields in over a decade, rate cuts have never been worth fretting over. Fed officials looked poised to only walk back a few of the massive increases that they approved to cool inflation, leaving their key benchmark borrowing rate at a decade-plus high.

But the Fed postponing cuts still does have some perks: It’s affording savers even more time to at least make sure they’re keeping their cash in the right place.

In fact, the top annual percentage yield (APY) on the market has actually increased since the Fed started foreshadowing that its rate cuts are delayed. After topping out at 5.4 percent APY in the fall of 2023, the highest savings yield on the market kicked off 2024 at a slightly lower level of 5.35 percent. Since the week of April 16, however, it’s edged back up again, hitting 5.55 percent APY, Bankrate data shows.

But what savers should pay attention to most is whether their APY is higher than the overall rate of inflation. Typically, yields are higher at nontraditional, online banks because they don’t face the same overhead fees as brick-and-mortar depository institutions.

Keeping your cash in the right place can make it even easier to grow your emergency fund. A $10,000 balance in an account with a 5 percent APY would yield a saver $500 in just a year, assuming rates stay at that level for the full 12 months, Bankrate’s savings calculator shows.

Another advantage to higher-for-longer interest rates: Yields on certificates of deposits (CDs) have leveled off, after bouncing lower since the end of 2023. Today, the top-yielding 5-year CD can offer a depositor a 4.55 percent APY, while the best 2-year CD is paying 5.36 percent a year in interest, Bankrate data shows. If you already have enough cash stashed away to cover at least six months’ worth of expenses, consider locking in a CD to complement your portfolio.


Americans with high-interest credit card debt were going to keep feeling the sting of higher interest rates with or without a rate cut. The average interest rate on a credit card hovered at 16 percent even when the Fed was keeping interest rates at near-zero. But today, after the culmination of 11 rate hikes worth a whopping 5.25 percentage points, those annual percentage rates (APRs) have been hovering closer to 21 percent since 2023, Bankrate data shows.

Americans with credit card debt will still want to prioritize paying off their balance as quickly as possible. One avenue that could help speed up their debt repayment: balance-transfer cards. Bankrate’s rankings of the best offers on the market are currently advertising a 0 percent introductory APR for as long as 21 months. You’ll have to craft a debt pay-off plan and stick with it, but transferring your balance could save you hundreds of thousands of dollars in the long run — often making the flat fee involved with transferring your balance worth it.

Americans can’t always time the market, but they might also find it beneficial to hold off on any big-ticket purchases that require financing, assuming that the Fed may eventually be able to start cutting interest rates at some point this year.

If you have to borrow in today’s high-rate environment, compare offers from multiple lenders before locking in a loan and keep a close eye on your credit score. Americans with less-than-good credit might have to settle for even higher interest rates than the average rate on the market.


It’s been two years since the average 30-year fixed-rate mortgage topped 5 percent for the first time since 2011, Bankrate data shows. It’s been more than a year and a half since mortgage rates barreled past 6 percent for the first time since 2008. And now, mortgage rates have been stuck above 7 percent — a more than two-decade high — for seven straight weeks.

All of that is Fed policy and hot inflation at work.

So far, today’s high rates have created more problems for homebuyers than solutions. The rapid surge in mortgage rates requires that prospective buyers have extra documentation — more income than many currently have — to get approved.

Financing $500,000 on a 30-year fixed-rate mortgage would’ve cost a borrower roughly $2,371 a month in principal and interest when rates hit a record low of 2.93 percent in Bankrate’s national survey of lenders. Today, that monthly payment has skyrocketed to $3,431, reflecting a 45 percent hit to homebuyer affordability.

Americans must earn at least $100,000 annually to afford a median-priced home in 22 states and the District of Columbia, a Bankrate analysis shows. The annual income needed to purchase a median-priced home in the U.S. has also jumped 46 percent since the start of 2020, the analysis also found.

The homeowners lucky enough to lock in a mortgage when mortgage ranks sank haven’t been budging, leading to inventory issues. Home prices grew 6.4 percent in February, the fastest annual rate since 2022, data from S&P CoreLogic’s Case-Shiller Home Price Index shows. It’s also impacting those who stay on the sidelines and keep renting: Rents have jumped 22.6 percent since February 2020, Bureau of Labor Statistics data shows.

Mortgage rates could hit 5.75 percent by the end of the year, according to Bankrate’s annual interest rate forecast. All of that, however, depends on the path for inflation, which drives the benchmark 10-year Treasury yield. Stubborn inflation has caused the key interest rate to surge almost a percentage point since the end of 2023, no doubt what’s keeping mortgage rates above 7 percent right now.

Americans should prioritize paying down any debts, improving their credit score and saving for a down payment. Set a budget, and stick with it. If you can’t find a home within your price range, it might make better financial sense to continue renting, so you can prioritize growing your income and wealth.


Investors have been massively recalibrating their expectations for when the Fed will cut interest rates, leading to volatility in financial markets. After expecting as many as seven rate cuts for 2024, investors now only expect that the Fed will cut borrowing costs once in 2024, bringing the fed funds rate down to a target range of 5-5.25 percent.

The key S&P 500 stock index is still up 18.4 percent over the past six months but is down 4 percent from its most recent record high.

Keeping a floor on how low stocks can go is continued resilience in the U.S. labor market. Unemployment has been below 4 percent for the longest stretch of time since the 1960s, fueling consumer spending and economic growth. But even though a slowdown in hiring hasn’t happened, Bankrate’s quarterly economists’ survey shows that experts are still expecting one. Their average forecast calls for a 4.2 percent unemployment rate by March 2025.

Investors who are saving for longer-term goals such as retirement are encouraged to take a long-term perspective, tuning out the latest bogeyman of the day. Stay the course with your retirement contributions and remember that downdrafts in the market can be an important buying opportunity. Diversification and time remain the best way to safeguard your portfolio against market volatility.

Rate cuts in 2024 aren’t so much a done deal any more

Regardless of how far away the Fed’s first rate cut remains, Powell took the opportunity to emphasize that the bar for a rate hike remains higher than the bar for a cut, even as inflation stays hot.

Fed officials first referenced it in their statement when they acknowledged that their inflation and employment goals are moving into better balance. Powell then added that policy is appearing to weigh on demand for labor and housing, indicating that rates are restrictive.

Even the strong labor market still doesn’t appear to be keeping the Fed on guard to leave interest rates high — though Powell indicated it could be enough of a reason to start to cut them if unemployment rises or hiring deteriorates.

“It’s unlikely that the next policy rate move will be a hike,” Powell said at the post-meeting press conference. “We’re committed to retaining our current restrictive stance for as long as it is appropriate.”

The fresh interpretation of monetary policy implies that the next steps may just be to give higher interest rates more time to work, rather than raising them even more.

“A pivot this year will require not just inflation stabilization, but convincing and durable evidence that the disinflation trend is back in play,” says Seema Shah, chief global strategist at Principal Asset Management. “The statement provides no mention of hikes and instead just emphasizes that they are not yet in a position to cut rates.”

Fed announces plans to start tapering balance sheet runoff

Hidden in the details of the Fed’s rate decision was also an announcement that officials are going to begin slowing how much they’re shrinking their balance sheet. Starting June 1, Fed officials will now let up to $25 billion worth of Treasury securities roll off their books at maturity each month, down from the previous pace of $60 billion.

The moves are separate from the Fed’s decision to cut interest rates and are instead intended to prevent disruptions in the overall plumbing of the financial system. An episode of extreme volatility in 2019, the last time the Fed was “normalizing” bank reserves, caused credit to temporarily seize up and interest rates to surge. It was enough to spark the Fed to begin growing reserves again.

For consumers, the decision could keep pressure off of the longer-term interest rates that also influence borrowing costs, particularly the 10-year Treasury yield and the 30-year fixed-rate mortgage.

“The less Treasury debt that rolls off the Fed’s balance sheet, the less debt that has to be absorbed by the market,” McBride says. “This could help keep long-term Treasury yields in check after heady increases thus far in 2024.”