

The Federal Reserve kept interest rates unchanged Wednesday, but the central bank’s latest policy decision could still have significant implications for household budgets. Higher energy prices stemming from the Iran conflict may have lasting inflationary effects, which likely contributed to the Fed’s decision to leave rates on hold as policymakers wait to gauge the economic fallout, economists said. The dynamic could also lead policymakers to consider raising rates at their September meeting, even as President Donald Trump has said that the U.S. “should have the lowest interest rate in the world.”
“It’s very difficult to read the chairman and know his view of the path forward,” said Eugenio Alemán, chief economist at Raymond James, referring to new Fed Chairman Kevin Warsh. However, any move toward higher rates would increase borrowing costs for consumers at a time when affordability pressures are already mounting. “Consumers will remain stressed going forward, and if they start increasing interest rates, conditions are going to deteriorate further,” Alemán said.
Source: CNBC
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