The Federal Reserve has kept short-term interest rates unchanged while implying that a rate hike could come as early as next month.
At the end of a two-day meeting on Wednesday, the Fed’s rate-setting Federal Open Market Committee held the target for the federal funds rate at 0.25-0.5 percent. Policymakers said in a statement that while hiring has been solid and economic growth has been picking up, inflation remains sluggish.
“The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives,” the statement said.
The Fed will take another crack at interest rates in mid-December.
RATE SEARCH: Rates are still low, so shop for a home equity line of credit today.
Who’s affected by Fed policy?
For now, the prime rate will remain 3.5 percent. Consumer debt directly tied to the prime rate will stay the same. That includes home equity lines of credit and most variable-rate credit cards.
Interest rates on mortgages and most auto loans are set by market forces and not by the Fed. Those rates move up or down independently of what the Fed does. Even when policymakers keep the federal funds rate steady, interest rates on mortgages and auto loans can change. But there are other ways the Fed’s decisions can affect you.
It’s about inflation
Investors had expected the central bank to hold the federal funds rate in place. The decision to keep rates where they are is “no surprise,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The Fed punts any interest rate move until the December meeting. With the election looming and uncertainty already gripping markets, the Fed needed to hold off …