The Federal Open Market Committee’s March meeting resulted in interest rates remaining untouched as the U.S. economy moves closer to bouncing back post-pandemic. Here’s everything you need to know:
The Fed Keeps Interest Rates Low
After convening for its scheduled March meeting to discuss monetary policy, the Federal Open Market Committee announced that it is keeping its key borrowing rate at 0-0.25 percent.
In a statement released after the meeting, the Committee explained that “it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment.”
The prime borrowing rate has been at its lowest in history since the coronavirus pandemic first dealt a blow to the U.S. economy.
Economic Recovery in Sight
Despite slower growth than desired, there is light at the end of the tunnel for the U.S. economy. A newly passed $1.9 trillion stimulus bill, as well as progress on COVID-19 vaccinations, hint at Americans being able to slowly return to normal life in a post-COVID world.
Yet, even with unemployment rates beginning to drop the economy itching to bounce back, the Fed plans to keep interest rates at their current level for some time. Most Fed officials expect the rates to remain where they are until at least 2023. By that year, the unemployment rate is expected to drop back down to its pre-pandemic levels.
How the Prime Borrowing Rate Affects You
Low interest rates are good news for most Americans. It means that APRs for credit cards, mortgages, and auto loans will remain low and competitive. If you have a high amount of credit card debt, it’s a good time to consider a balance transfer. And if you’re thinking of applying for a new credit card, the current rates will mean lower interest charges than usual.