What sky-high borrowing costs mean for you and your money
JPMorgan Asset Management Chief Market Strategist Gabriela Santos analyzes the Federal Reserve's decision making on 'The Claman Countdown.'
The Federal Reserve signaled at the conclusion of its two-day meeting on Wednesday that interest rates will remain elevated for some time, forcing Americans to adapt to a reality where borrowing money is far more expensive than it used to be.
In this new era of high interest rates, savers stand to benefit with nice returns from low-risk investments like Treasurys, but borrowers face steeper debt payments on everything from credit cards to mortgages to student loans.
Policymakers voted during the meeting to leave interest rates unchanged at a range of 5.25% to 5.5%, the highest level since 2001. But officials also indicated that rates are unlikely to come down substantially in the near term as high inflation lingers, meaning that borrowing money will remain far more expensive than it was just four years ago.
Federal Reserve Chair Jerome Powell holds a press conference at the end of the two-day Federal Open Market Committee meeting at the Federal Reserve in Washington, D.C., on March 20. (Mandel Ngan/ AFP via Getty Images / Getty Images)
For Americans who carry a balance from one month to the next, the new era of persistently high interest rates could be costing them hundreds – even thousands – of dollars.
While the federal funds rate is not what consumers pay directly, it affects borrowing costs for home equity lines of credit, auto loans and credit cards. Higher rates have helped push the average rate on 30-year mortgages above 7% for the first time in years.
In fact, housing affordability is as bad today as it was during the peak of the 2008 housing bubble thanks to the
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