The U.S. Federal Reserve is looking to maintain near-record low interest rates to encourage lending during the coronavirus pandemic. The Fed’s board recently met to reconsider their current fiscal stimulus efforts. Here are the details of the meeting and what consumers can expect going forward.
Federal Reserve Votes to Maintain Prime Rate
The Federal Reserve is seeking to continue the recovery of the U.S. economy from the damage wrought by the coronavirus pandemic. During the November meeting, members of the Federal Open Market Committee (FOMC) voted to keep its target federal funds rate at the current level: 0% to 0.25%.
Fed Not Ruling Out More Assistance
While the prime rate remains at rock-bottom lows, the Federal Reserve is not ruling out further action to bolster the U.S. economy. “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” the Fed stated in a press release following the meeting.
That sentiment was echoed by Fed Chair Jerome Powell in a later press conference. Powell reiterated that “it may take continued support from both fiscal and monetary stimulus considering the extent of the downturn,” while also noting the “crucial difference” the CARES Act had on boosting the economy at the height of the COVID-19 pandemic this summer.
Powell remains optimistic for the future, however. The Fed’s chair notes that the economic recovery from the coronavirus pandemic will be stronger than that experienced after the Great Recession for 2008 – but only with more significant financial support from the government.
"The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term."
What Does the News Mean for Credit Cardholders?
Maintaining the prime rate at such a low level is great news for credit cardholders. Consumers are currently enjoying interest rates significantly lower than this time last year.
The average APR on all credit cards is currently around 20.2%. That interest rate was almost a full point higher in 2019, at approximately 21.4% in November of last year. Of course, those with excellent credit can anticipate rates significantly lower than the national average. According to BestCards data, the average APR for excellent credit scores is currently around 14.5%.
Low rates make this an ideal time to consider a new credit card. Even individuals with bad credit – or no credit history – can expect rates significantly lower than in recent years.
Related Article: What Is the Average Credit Card APR? November 2020
Featured photo by Matthew Henry / Burst
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