The Decision
The Federal Reserve announced Wednesday that it will hold its benchmark interest rate steady, defying growing calls from Wall Street and some political figures to begin cutting rates. Fed Chair Jerome Powell emphasized that the central bank remains "data dependent" and will not be rushed into premature action.
The federal funds rate remains in the 4.25-4.50% range, where it has sat since the last adjustment. While inflation has retreated from its peak, it remains stubbornly above the Fed's 2% target, particularly in services and housing.
Why It Matters for Your Wallet
For everyday Americans, the Fed's decision has real consequences. Mortgage rates continue to hover near 7%, making homeownership increasingly difficult for young families. Credit card interest rates remain near record highs, and auto loans have become significantly more expensive than they were just three years ago.
Small business owners are feeling the squeeze too. Higher borrowing costs mean expansion plans get shelved, hiring slows, and the entrepreneurial engine that drives American job creation operates under added strain.
The Inflation Problem
The core issue remains inflation. While the headline CPI number has come down substantially from its 9% peak, the prices Americans actually experience — at the grocery store, the gas pump, and the doctor's office — remain painfully elevated compared to pre-pandemic levels.
Food prices are up roughly 25% since 2020. Housing costs have surged even more in many markets. For working families living paycheck to paycheck, these aren't just statistics — they represent real hardship.
Conservative Criticism
Many fiscal conservatives argue that the inflation crisis was largely self-inflicted, caused by excessive government spending and loose monetary policy during 2020-2021. The trillions in stimulus spending, they argue, flooded the economy with dollars that inevitably drove prices higher.
"You can't print trillions of dollars and expect prices to stay the same," noted one prominent economist. "The Fed is now trying to clean up a mess that Washington created."
What to Watch
The next Fed meeting in March will be closely watched. Markets are currently pricing in two rate cuts for 2026, but Powell has been clear that the timeline depends entirely on incoming data. If inflation continues its slow decline, relief could come by summer.
Are you feeling the impact of high interest rates? How has it affected your financial decisions?
