Business

Why Fed Won’t Have a Big Impact on Your Loans Anytime Soon

Published

11 years ago

March 19, 2015

MATTHEW CRAFT, AP Business Writers
PAUL WISEMAN, AP Business Writers

NEW YORK (AP) — Nobody knows when exactly, but the day will eventually come when the Federal Reserve nudges its benchmark lending rate from next to zero to something slightly higher.

When that happens, it will put upward pressure on borrowing rates throughout the economy — for credit cards, mortgages and student loans. But that doesn’t mean the era of incredibly low interest rates will soon be over.

The Fed’s chair, Janet Yellen, has taken pains to be cautious. On Wednesday, the central bank gave more signals that it will move slowly toward its first interest-rate increase in nearly a decade. By the end of the year, Fed officials expect the benchmark rate will reach 0.625 percent.

It was a different world the last time the Fed began a series of hikes. Rates were already much higher than today. In June 2004, the Fed lifted its benchmark rate from 1 percent to 1.25 percent. By the time the Fed was finished in 2006, the rate had reached 5.25 percent.

Nobody expects anything like that now. With the economy still growing slowly and inflation minuscule, rates will likely hover near historic lows. The Fed doesn’t want to ratchet up the monthly payments on your credit card. It’s in no rush.

“You’re going to see rates remain low for quite some time,” says Patrick Maldari, senior fixed-income specialist at Aberdeen Asset Management.

HOUSING

Many expect mortgage rates to creep higher this year. The average 30-year mortgage carries a rate of 3.7 percent, according to Freddie Mac. That’s close to a record low of 3.31 percent and compares with an average rate of 5.9 percent a decade ago.

Greg McBride, chief financial analyst at Bankrate.com, thinks homeowners ought to lock in mortgage rates as long as they remain below 4 percent. If you haven’t refinanced already, in other words, consider it soon.

Home loans won’t hinge on the Fed’s next move, though. Mortgage rates are closely tied to long-term interest rates, specifically the 10-year Treasury note. These rates are tethered to the Fed’s benchmark yet have plenty of wiggle room.

The 10-year yield has actually been falling over the past year. The reason? The Treasury market is dominated by global players. So when Europe’s economy runs into trouble, for example, traders around the world look for safety in the Treasury market, buying U.S. government bonds and pushing yields down. Another factor: The Fed is keeping a lid on yields by sitting on trillions of dollars of Treasurys following a huge bond-buying program that ended last year.

SAVINGS

It’s been a tough time for people socking away money in savings. On average, savings accounts pay an annual percentage yield of 0.09 percent, according to Bankrate.com. A one-year certificate of deposit pays a paltry 0.28 percent. For every $1,000 saved, in other words, the bank will give you $2.80. Ka-ching!

“Savings rates are nearly at zero and, unfortunately, I think depositors aren’t going to see much of a difference,” says Casey Bond, managing editor at GoBankingRates.

The Fed has signaled that it will raise rates slowly and carefully. A series of hikes large enough to lift yields on savings accounts, however, could put the economic recovery at risk by curbing lending and business spending. “Anything that would give savers a real boost would be too disruptive,” Bond says.

“I think people need to be focused on other things, like avoiding bank fees,” Bond says. “Fees can wipe out your earnings because savings rates are so low.”

CREDIT CARDS

Credit card rates could start to inch up once the Fed raises its benchmark federal funds rate — especially the low teaser rates credit card issuers use to entice people to sign up or shift credit card balances.

McBride advises that borrowers “grab those zero-interest balance transfers and introductory credit card rates. As the Fed moves away from zero interest rates later this year, credit card issuers will too. Chip away at your variable-rate debt now before interest rates start to climb.”

Credit card rates remain high — variable credit card rates average nearly 15.8 percent, according to Bankrate.com. But they could head higher if the fed funds rate goes up. That’s because credit card rates are based on the prime rate that banks charge their best customers, and the prime rate is based on the Fed funds rate.

INVESTMENTS

To judge by the stock market’s daily swings, investors fear the Fed’s first rate increase. Speculation that the Fed is preparing to move usually knocks stocks down. But the market has actually performed well in the face of rising interest rates. A recent report from UBS looked at the Fed’s initial rate hikes going back to 1954. It showed that the Standard & Poor’s 500 index rallied an average of 7.6 percent in the next six months.

Many investors are confident that as long as the Fed moves gradually, the stock market should be fine. That’s what happened in the last round of Fed hikes, in 2004. The S&P 500 finished the year with a 9 percent gain.

___

Wiseman reported from Washington.

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Oakland Post: Week of July 22 – 28, 2026

The printed Weekly Edition of the Oakland Post: Week of July 22 – 28, 2026

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18 hours ago

July 27, 2026

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Starting This Summer, California Car Buyers Can Get an Instant $3500 Off the Cost of Electric Vehicles

OAKLAND POST — Beginning later this summer, eligible Californians can receive a $3,500 rebate on new zero-emission vehicles with a manufacturer’s suggested retail price of up to $50,000. Buyers purchasing qualifying used electric vehicles priced at up to $25,000 can receive a $1,750 rebate. The rebate will be applied directly at participating dealerships, allowing buyers to receive the discount immediately instead of waiting for reimbursement.

Published

1 day ago

July 26, 2026

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By Bo Tefu, California Black Media

California residents purchasing their first zero-emission vehicle will soon be eligible for an instant rebate of up to $3,500 under a new state program aimed at making electric vehicles more affordable.

Gov. Gavin Newsom signed Senate Bill (SB) 168 on July 16, creating the MyFirstEV program as part of California’s 2026-27 state budget. The initiative dedicates $135.5 million in state funding for point-of-sale rebates, which participating automakers will match dollar for dollar. State officials said the combined investment will provide $270 million in savings for first-time electric vehicle buyers.

Beginning later this summer, eligible Californians can receive a $3,500 rebate on new zero-emission vehicles with a manufacturer’s suggested retail price of up to $50,000. Buyers purchasing qualifying used electric vehicles priced at up to $25,000 can receive a $1,750 rebate. The rebate will be applied directly at participating dealerships, allowing buyers to receive the discount immediately instead of waiting for reimbursement.

“With our new instant rebate program for electric vehicles, we’re making it easier for families to drive clean, breathe clean, and keep more money in their pockets,” Newsom said in a statement.

The MyFirstEV program is part of a broader $600 million investment in California’s clean transportation economy included in the state budget. The funding package also provides $150 million for the Community Air Protection Program, $19.8 million for the Clean Cars 4 All program for lower-income residents, $35 million for clean off-road equipment through the Air Quality Improvement Program, $135.5 million for the Clean Truck and Bus Voucher Incentive Project, and $130 million for the Carl Moyer Program to replace older heavy-duty engines with cleaner alternatives.

According to the governor’s office, the transportation investments are funded through Cap-and-Invest revenue and smog-abatement fees while maintaining a balanced state budget.

California continues to expand its zero-emission transportation network. The state surpassed 2.5 million cumulative zero-emission vehicle sales earlier this year, exceeding its original goal of 1.5 million sales by 2025. Officials also reported that California has more than 200,000 public and shared electric vehicle charging plugs statewide, in addition to an estimated 800,000 home charging stations.

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Surveillance Pricing Fight: State Senate Debates Bill Banning Retailers from Using AI to Set Prices Based on a Buyer’s Profile

OAKLAND POST — Currently, there is no precise public data quantifying how many Black residents in California are actively affected by surveillance pricing. However, because the practice leans heavily on ZIP codes and localized demographic tracking, algorithmic pricing models frequently result in higher costs for Black and non-white communities compared to others, according to the Electronic Frontier Foundation (EFF), a leading nonprofit organization defending civil liberties in the digital space

Published

1 day ago

July 26, 2026

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By Antonio Ray Harvey, California Black Media

Surveillance pricing—the algorithmic practice of using personal data to determine individualized costs for goods and services—is widespread in California, according to Assemblymember Chris Ward (D-San Diego). He warns that this system is actively impacting consumers across the state, and Black Californians could be specifically targeted.

Ward’s Assembly Bill (AB) 2564, the Surveillance Pricing Act, aims to prohibit businesses from using this practice.

“Surveillance pricing is a growing phenomenon that a lot of people don’t realize is already happening,” Ward told California Black Media (CBM) at the State Capitol on June 29.

On June 22, the bill passed out of the Senate Privacy, Digital Technologies, and Consumer Protection Committee with a 5-2 vote and was re-referred to the Committee on Judiciary for consideration. On May 27, the Assembly voted to advance AB 2564 with a 42-21 vote.

Currently, there is no precise public data quantifying how many Black residents in California are actively affected by surveillance pricing. However, because the practice leans heavily on ZIP codes and localized demographic tracking, algorithmic pricing models frequently result in higher costs for Black and non-white communities compared to others, according to the Electronic Frontier Foundation (EFF), a leading nonprofit organization defending civil liberties in the digital space.

Justin Brookman, a public-interest lawyer, supports AB 2564. His organization is an official sponsor of the bill. He advocates on behalf of Consumer Reports.

“We found that people shopping for the exact same item at the exact same time, and the exact same store, were getting different prices. In some cases, up to 23% higher,” Brookman said. “So, one person looking at a jar of Skippy peanut butter, it was $2.99. Another person, same exact time, it was $3.69.”

AB 2564 is primarily opposed by a coalition of corporations and technology industry associations. They argue that the bill’s language is overly broad, outlaws common consumer-friendly discounts, and creates costly litigation risks for small businesses.

Chamber of Progress – a tech industry association that lobbies for public policies that expand digital commerce and technological advances – says that banning data-driven personalization would wipe away targeted digital coupons that families count on to prolong their budgets.

In a March 18 written letter to the Assembly Committee on Privacy and Consumer Protection, Robert Singleton, senior director of Policy and Public Affairs for California and the U.S. West at the Chamber of Progress, urged the body to oppose AB 2564.

“We share the legislature’s concern about affordability,” Singleton wrote. “The cost of living is the top issue facing American families, and we understand the impulse to ensure consumers are getting a fair deal. But this bill risks backfiring on the families it aims to help.

Assemblymember Lori Wilson (D-Suisun City) supported and voted for the bill in the Assembly on May 27, but she still has questions about a “litigation risk” that could be costly.

“Every business or retailer that is spending their time battling courts is spending resources, which drives the cost up for everyone,” said Wilson, a member of the California Legislative Black Caucus (CLBC).