Fed Watch Live Blog: Federal Reserve Holds Rates Steady, Expects Only 1 Rate Cut This Year

Yes, the Federal Reserve is holding the federal funds rate at the same range it has for almost a year, the highest it's been since 2001. The decision means that even though interest rates on savings will remain good for earners, borrowing rates for loans and credit cards will stay expensive, too. 

However, there's good news from today's announcement, said Shang Saavedra, founder of Save My Cents and CNET Money expert review board member. "Inflation appears to be cooling," she said. 

At the same time, inflation isn't as low as the Fed's 2% target goal. Saavedra often asks her clients if their wage growth is keeping up with price growth. "For 2024, your income needs to be around 3.5% higher than 2023 to keep up with inflation," she said. 

If you don't have the room or resources to take on extra work to increase your income, that's OK. But you might look for creative ways to improve your cash flow by taking on a side hustle you're passionate about. 

Otherwise, try sticking to your budget and cutting back when possible. You could try selling gently used items in your home to bring in a few extra bucks. Saavedra also recommends holding off on purchases of large items that may require financing, such as a car or home renovations.

Even though today's decision from the Federal Reserve will likely delay lower mortgage rates, you shouldn't base your decision to buy a home on that, according to Jeb Smith, a real estate agent and a member of CNET Money's expert review board. 

"The advice is always the same," said Smith. "Buy when it's the right time in your life. Basing your decision on factors you can't control or trying to pick the top or bottom in the market is a losing battle," he said. 

Read more: Don't Let the Fed Dictate Your Homebuying Plans. Buy a House When You're Ready

The Federal Reserve's monetary decisions alter the price of credit, which has a domino effect on mortgage rates and the broader housing market. Mortgage rates move up or down depending on multiple factors: supply, demand, inflation and even the employment rate. 

Today's decision by the Federal Open Market Committee to hold interest rates steady didn't come as a surprise. Though the Fed outlined a plan to eventually cut borrowing rates this year, recent economic data is signaling that it's still too early. Many housing market experts think we won't see rate cuts until September or November, but some economists argue there's still hope for a rate cut in July.

Prospective homebuyers may have to wait longer for lower home loan rates. But remember that the individual mortgage rate you qualify for is also determined by personal factors, such as your credit score and loan amount.

Read more: Why the Federal Reserve Affects Mortgage Rates

Today's decision by the central bank to leave its benchmark interest rate remaining at 5.25% to 5.5% means your credit card's annual percentage rate likely won't be changing, at least until July. An APR is the interest rate issuers charge you on your outstanding credit card balance. 

Though an interest rate cut isn't happening this month, you could take the time to try to pay off your existing credit card debt. But we know that's easier said than done. Credit card delinquencies increased to 6.86% in the first quarter of 2024, compared with 4.57% in the first quarter of 2023, according to the Federal Reserve Bank of New York. Total credit card debt in the US is sitting at $1.12 trillion, 13.1% higher than last year.

High interest rates make credit card APRs higher, which makes debt harder to pay off. But you're not powerless. Try these eight tips to get your credit card debt under control.

Read more: What a Change in Interest Rates Means for Your Credit Cards

We're still on standby for lower mortgage rates. As expected, the Federal Reserve maintained its interest-rate holding pattern during today's policy meeting. 

For now, mortgage interest rates are likely to remain elevated and US home sales subdued, according to Jason Walter, a real estate agent and a member of CNET Money's expert review board. 

But all hope isn't lost. 

"It was also announced today that the Consumer Price Index for May came in below expectations. This is a positive sign that inflation may be headed in the right direction and the Fed could start cutting rates later this year," said Walter.

According to the Summary of Economic Projections, Fed members now expect to make just one rate cut in 2024. Though that's two less cuts than the central bank had previously outlined in March, prospective buyers should see some mortgage rate relief later this year.

Read more: June Fed Meeting: The Path to Lower Mortgage Rates Is Still Wait and See

Though many people point to a strong labor market as a key reason why the Fed won't make rate cuts, Fed Chair Jerome Powell said the central bank downsized its projected rate cuts for 2024 because of the inflation forecast. Right now inflation is still well over the Fed's 2% target.

The Federal Reserve held interest rates steady at a target rate of 5.25% to 5.5%, to no one's great surprise. 

Today's CPI report showed inflation cooling more than expected last month, but it's not enough to overcome inflation's continued grip combined with a resilient labor market. In a press release following the meeting, the Fed restated its commitment to sustainably moving toward its 2% annual inflation goal.

Read more: Evidence of Cooling Inflation Doesn't Sway the Fed, Which Holds Steady on Interest Rates

The Fed voted to hold interest rates steady during today's meeting. That means the interest rate on your credit card, also known as your APR, won't go down. 

"If you're carrying a balance on your credit cards, your main concern is probably being able to make your minimum payment and not run up your balance too much more," said credit expert Gerri Detweiler. 

Even if the Fed goes through with at least one rate cut this year, making at least your card's minimum payment will help you avoid any late charges and prevent you from damaging your credit score.

"A small change in interest rates isn't likely to make that debt suddenly feel more affordable," said Detweiler. 

According to CNET's most recent survey, the majority of Americans are concerned about inflation. Though the price of groceries and gas has gone down from record highs a few years ago, that isn't lessening the sticker shock we feel every day. 

This morning's CPI report shows that inflation has slightly cooled since last month, but it's still not close enough to the Fed's annual 2% target. That means we'll continue to feel our purchasing power diminish a bit longer.

Though budgeting apps and cutting costs can certainly be helpful, many people are postponing long-term purchases, like buying a house or car. Some Americans are dipping into savings and relying on financing to cover basic expenses. 

"People are seeing the effects of inflation in their day-to-day lives," said Bola Sokunbi, founder of Clever Girl Finance and a member of CNET Money's Expert Review Board. 

Read more: Worried About Inflation? 93% of Americans Are, Too, CNET Survey Finds

This morning's Consumer Price Index report shows that year-over-year inflation is now at 3.3%. Even though price growth has slightly cooled from last month, inflation isn't fully in check. 

Most experts are predicting that the Fed will keep borrowing rates high by holding interest rates steady for the eighth time. 

The Fed's tightening cycle has now lasted two years, said Sean Snaith, director of the University of Central Florida's Institute for Economic Forecasting. Even so, inflation has yet to dip below 3%, and progress toward the 2% inflation target has stalled. 

"Today's inflation data wasn't a four-alarm fire for the Fed, but it showed that inflation continues to smolder," Snaith said.  

Until we see a more substantial decline in inflation, you can expect higher prices on everyday essentials and bills. But some stores, including Target and Walmart, are marking down items that can help you cut costs.

Certificate of deposit rates remain elevated as banks await the Fed's interest rate announcement this afternoon. Currently, top CDs offer investors up to a 5.35% annual percentage yield, more than three times the national average for some term lengths. If the Fed holds rates steady for a seventh consecutive time -- as many experts believe it will -- we're likely to see these fixed saving yields stay high for a while longer. 

When you open a CD, your APY is set for the term you choose, so securing a good rate now allows you to enjoy those returns for a while, regardless of the Fed's moves.

Experts had previously anticipated three interest rate cuts this year, but stubbornly high inflation put the kibosh on those predictions. While many observers still expect the Fed to drop rates, most agree it won't happen until the fall or winter. That gives savers more time to lock in one of today's top CD rates and protect their earnings. 

Read more: Best CD Rates for June 12, 2024

Mortgage rates change on a daily and weekly basis in response to economic data, monetary policy changes, market expectations and geopolitical events. The Federal Reserve doesn't directly set mortgage rates, but they're affected by the government's interest rate decisions. So, this week is a big one for mortgage rates.

Today, the average rate for a 30-year fixed mortgage is 7.09%, down 0.02% compared with last week, according to data from CNET sister site Bankrate.

This morning, we got the latest Consumer Price Index data, which shows inflation slowing in May. While that probably won't sway the Fed's decision to hold rates steady, it may impact the central bank's outlook for rate cuts this year. We'll hear more about that outlook when Fed Chair Jerome Powell holds a press conference at 2:30 p.m. ET. If Powell speaks favorably about interest rate cuts in 2024, we could see some improvement in mortgage rates.

Read more: Today's Mortgage Rates for June 12, 2024

I've seen a few statements after the CPI numbers came out this morning that I'm fairly certain were written last night. Almost like Mad Libs with the numbers filled in. The commentaries all indicate that inflation numbers are still high. 

Yet when I spoke with Gisela Hoxha, a Citi US economist, she sounded upbeat about the numbers. In particular, core inflation was much softer than expected. 

Hoxha noted that as inflation started coming down over the last year, disinflation was mostly seen in the prices of goods, while services continued to be stubbornly high. 

That changed a bit with today's numbers, with slowing in some of the more sticky service components of CPI. "This trend actually showed that some of the services components were softer, like auto insurance, personal services," Hoxha said. 

Though the shelter index continues to remain high — up 0.4% month over month, yet again — these softer numbers could put Fed Chair Jerome Powell in a better mood at today's press conference following the Federal Open Market Committee meeting.

Hoxha also noted that we're expecting more data, including labor market numbers, to be released before the next Fed meeting in late July. Citi predicts the Fed will cut interest rates three times this year, in September, November and December. But there is certainly some probability for July, she said.

We'll keep you in the loop as we talk to more of the experts.

If you're reading this, high interest rates have probably caught your attention. For the last couple of years, rates on consumer products have skyrocketed, making borrowing more expensive and saving rates more competitive. 

Will that change after today's Fed meeting? Probably not. 

If you want to understand how the Fed's rate decision can impact the money in your savings account or increase the time it takes to pay down your credit card debt, you've come to the right place.

Read more: The Fed Decides on Interest Rates Today. Here's Why That Matters for Your Money

Daniella Flores, a CNET Money Expert Review Board member, has been closely following the Fed's moves. 

"Even though we may not see any cuts in June, there are still four more meetings scheduled before the end of the year," said Flores. "Seeing how the summer goes, we could see a potential cut in September, unless the job market continues to do well."

Other experts believe there's a chance we could see rate cuts as soon as July. 

Consumer prices were unchanged from last month, another signal that inflation could finally be cooling. This morning's Consumer Price Index data for May showed that inflation rose by 3.3% over the last 12 months, slightly down from April's 3.4%. Core inflation, which excludes volatile food and energy prices, rose by 0.2% month over month, also slightly down from 0.3% in April. 

High housing costs prevented inflation numbers from sinking even lower, with the shelter index up by 0.4% for the fourth month. But gas prices dropped a whopping 3.6%, according to the report. 

Today's inflation numbers are unlikely to affect the Federal Reserve's vote on interest rates later today. However, they could provide another strong data point to convince the Fed to lower rates later this year, maybe as soon as next month.

Read more: Inflation Flatlines in May, Bolstering Hopes That the Fed Could Cut Interest Rates by July

Though experts disagree on exactly when the central bank will start lowering its benchmark interest rate, July seems like a distinct possibility. Chairman Jerome Powell has said that the Fed's governing body is exercising caution but looking for a few clear economic signals before it makes any moves. If inflation continues to decelerate at a steady pace, borrowing rates could become less expensive by the end of the year. 

Today's Fed meeting should give us a clearer picture of when interest rate cuts are expected. Stay tuned here for more insight from CNET Money. 

Read more: Could the Fed Cut Interest Rates in July? Yes, Say These Experts