High mortgage and credit card rates could linger until 2025.

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If you were holding out for lower interest rates on credits cards or mortgages, expect to only see modest relief for the remainder of the year and much of 2025.

That’s because the Federal Reserve is keeping its benchmark interest rate steady to discourage borrowing, which it will do until there’s more evidence that inflation is under control.

Unfortunately for borrowers, inflation isn’t under control — at least, not quite yet.

While the annual inflation rate has fallen from a peak of 9.1% in June 2022, it’s been hovering closer to 3% for the past 10 months. That’s still above the Fed’s target rate of 2%.

On Wednesday, inflation remained mostly in line with expectations, ticking up 0.3% in April after increasing by 0.4% in March, according to the latest data from the consumer price index. The year-over-year inflation rate is now 3.4% — down slightly from 3.5% in March.

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While inflation seems to be trending in the right direction, there’s still a long way to go considering how hard it’s been to get down to 2%. For that reason, the central bank is expected to keep interest rates relatively high well into 2025.

How interest rate cuts will play out
The Fed’s current benchmark lending rate is a range between 5.25% and 5.5% — the highest it’s been in 23 years. This rate influences what you pay in interest for loans, credit cards, auto financing and, indirectly, what you pay for mortgages, too.

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Most forecasts predict two 0.25 percentage point cuts by the end of the year, with the first cut expected in September. That would bring the federal funds rate to 4.75% to 5%.

Don’t expect rates to start dropping much faster after that. By April 2025, there’s a 80% probability that the Fed’s rate will be 4% or higher, according to the CME FedWatch tool, which uses futures pricing to predict rates.

That’s in line with the forecast provided by PNC Financial Services Group, a financial firm that expects the Fed’s rate to stay above 4% “through 2025 and beyond.”



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