The Federal Open Market Committee meets this week, but the Federal Reserve is expected to leave interest rates unchanged. While they have not ruled out increasing rates as early as next month, the decision will extend the time consumers have to take advantage of lower interest rates by refinancing mortgages or paying ahead on their credit cards.
Many financial experts expect rates to increase by June unless the economy slips. In the past month, the economy has seen improvements following the stabilizing of various global markets. This comes after a very volatile January that saw oil prices plummet, leaving consumers and investors alike cautious. However, while the first quarter of 2016 has shown great improvements over the final quarter of 2015, many expect the slow wage growth is one of the main reasons behind the Fed’s decision to hold interest rates steady.
Wages have actually declined since February, and unemployment has remained at 4.9 percent. By leaving the interest rate unchanged, the Fed is giving consumers more time to take advantage of the low rates and refinance their mortgages. They can also use this time to refinance any debt that has a variable interest rate, the rate that is directly affected by the Fed’s decisions and is often the cause of loan defaults.
Economists expect the rate, which currently sits at 0.25 percent, to reach as high as 1.0 percent by the end of the year, increasing the amount of interest consumers pay on auto loans, credit cards and mortgages.
If you want more credit, check out MoneyTips' list of credit card offers.