The Federal Reserve is expected to maintain interest rates steady at its Jan. 28-29 meeting, with only a few rate cuts anticipated over the course of 2025. According to Greg McBride, chief financial analyst at Bankrate, this means that most consumer loans will experience moderate price reductions by the end of 2025.
Interest rates have been trending lower since the Federal Reserve cut rates three times in 2024, with the federal funds rate decreasing by a full percentage point since September. However, inflation remains above the Fed’s 2% target, and experts expect the central bank to move more cautiously on rate cuts in 2025.
The Fed has reduced its outlook for expected rate cuts in 2025 from four to two quarter-point increments, citing robust U.S. economic data that raised concerns about the Fed’s ability to cut rates further.
As a result, interest rates are expected to remain relatively stable, with minimal impact on consumer borrowing and savings rates. Here are McBride’s predictions for where rates will head in 2025:
* Credit card rates: 19.8%
* Mortgage rates: 6.5%
* Auto loan rates: 7%
* High-yield savings rates: below 4%
Overall, while interest rates may not decrease as much as expected, McBride notes that they will still be lower than pre-2022 levels, providing some relief for consumers.
Source: https://www.cnbc.com/2025/01/16/interest-rate-predictions-for-2025-mortgages-credit-cards-car-loans.html