On Wednesday, the Federal Reserve announced its decision to keep interest rates unchanged in response to concerns regarding the economic impact of President Donald Trump’s tariff policies. As inflation showed signs of moderation, an ongoing trade war raises alarms about potential price hikes on consumer goods in the future.

Brett House, an economics professor at Columbia Business School, expressed that “Tariffs on aluminum, steel and oil are essential elements to production across a wide range of products. Those price increases are going to ripple more widely across the American economy.”

Adding to the growing worries, Kevin Hassett, director of the National Economic Council, mentioned the possible “uncertainty” stemming from the United States’ tariff agenda. House further elaborated, noting that increased global uncertainty leads to a more cautious approach from the Fed, positioning them in a “wait-and-see mode.”

Impact on Borrowing Costs and Consumer Finances

The federal funds rate, which affects what banks charge each other for overnight loans, also influences various consumer borrowing and savings rates. Following rate hikes in 2022 and early 2023, consumer borrowing costs surged, but recent reductions in the benchmark rate have yet to significantly impact these costs.

According to Greg McBride, chief financial analyst at Bankrate.com, “The pressure on household budgets is unrelenting.” While a decrease in the federal funds rate may suggest lower borrowing costs for consumers, many still grapple with elevated prices and high rates on loans.

Current Trends in Key Loan Types

Credit Cards

Most credit card rates adjust based on the Fed’s benchmark interest. Despite the Fed’s steady rate decisions, average credit card APRs have decreased to 20.09%, down from 20.27% at the start of the year, as reported by Bankrate. Matt Schulz, chief credit analyst at LendingTree, noted that “credit card rates have fallen from their 2024 record highs,” highlighting a trend of monthly declines.

Mortgages

Fixed-rate mortgages are seeing a similar decline as uncertainty regarding tariffs and economic conditions continues to affect consumer confidence. As of March 19, the average rate for a 30-year fixed mortgage stood at 6.78%, with a 15-year option at 6.24%, according to data from Mortgage News Daily.

Auto Loans

Though auto loan rates have eased from previous highs, payments are being affected by rising car prices linked to tariffs. The current average rate on a five-year new car loan is about 7.2%, while used car loans average 11.3%. These figures reflect an increase from the end of 2024, when rates were at 6.6% and 10.8%, respectively.

Student Loans

Federal student loan rates, which are fixed, provide some stability against ongoing economic shifts. For the 2024-25 academic year, undergraduate direct federal student loans carry an interest rate of 6.53%, which has risen from the previous year’s 5.50%. These rates will be influenced by the outcome of the May auction of the 10-year Treasury note.

Savings Outlook

On a positive note, savings rates remain relatively unchanged and continue to offer attractive returns. According to McBride, “savings rates really haven’t changed all that much, that’s the good news.” Currently, top-yielding online savings accounts offer an average interest rate of 4.4%, which remains favorable compared to the annual inflation rate of 2.8%.