WASHINGTON—Most consumers think their credit card rates are too high and predict the Federal Reserve will reduce rates by Fall, a new study reveals. The Fed’s Open Market Committee will announce later today whether it opted to adjust rates.
With the Federal Reserve expected to contemplate a rate cut on Wednesday and markets indicating there is a 97% chance of a drop in rates by the Fed’s September meeting, WalletHub has released the results of its Fed Rate Survey gauging consumer sentiment on the matter.
Highlights from the report:
- Rate-Cut Odds: There is a 23% chance the Fed will reduce its target interest rate on June 19. There is an 87% chance of a rate cut by July 31, and the odds rise to 97% by September 18.
- Consumer Support: 76% of people support a Fed rate cut, and around the same percentage think it would be good for the economy.
- Credit Card Savings: 76% of Americans say their credit card interest rates are too high. Credit card users would save roughly $1.6 billion in interest if the Fed cuts its target rate. The average household currently owes $8,390, WalletHub said.
- Trump vs. the Fed: Seven in 10 people say the Federal Reserve knows how to grow the economy better than President Trump.
‘Almost Certain to See’
“The Fed probably won’t cut its target rate at its June meeting,” said WalletHub CEO Odysseas Papadimitriou. “But future pricing indicates we’re almost certain to see a rate reduction this summer or early fall. The Fed has more economic data than anyone, so if they are simply reacting to market conditions, there’s no reason to question them at this point. However, the Fed must make it very clear that the move is not politically motivated.
“A Fed rate cut would be great for people with credit card debt, who WalletHub projects will save roughly $1.6 billion on interest,” continued Papadimitriou. “If reducing rates delays the next recession, it would help all of us by giving us some extra time to save up for leaner times. Plus, a drop in rates would put American businesses and consumers in a better position to withstand an escalation in the trade war with China.”