Yes, Interest Rates Will Drop in 2025–2026, But How Far?
Keeping in mind that projections aren’t prophecies…
Interest rates can punish or reward us.
Which is the case for you depends on whether you’re in debt or earning interest.
The market interest rates are strongly influenced by the decisions of the Federal Open Market Committee (FOMC). The “Fed” kept interest rates near zero from early 2020 to early 2022.
Finally, in March 2022, they realized inflation wasn’t “transitory” and decided they had to do something drastic about it. They embarked on…
The Fastest Tightening in Decades
Facing the highest inflation in four decades, from March 2022 to August 2023 the Fed tightened its monetary policy such that the Federal Funds rate soared from 0.08% to 5.33%, the fastest tightening in several decades.
If you were borrowing money, things became painfully expensive, as:
- Interest on credit card balances shot up
- Auto loan rates increased sharply
- Mortgage rates nearly tripled
If you were a saver, on the other hand, you finally started seeing some opportunities for higher interest income, including:
