Federal Reserve Chair Won’t Cut Interest Rates

a black man sitting in front of a laptop computer at a table
Alyssa Guzik
May 22, 2024

For the past several weeks, there has been talk from economists and the Federal Reserve that interest rates would be cut as early as May. After the most recent Federal Reserve meeting, their tune has changed.

The chair of the Reserve, Jerome Powell, held a press conference to discuss the Reserve’s plans for rate cuts. Even though inflation has continued to drop from its peak of 9.1% in 2022, it’s still higher than Powell wants. Yet he is refusing to cut rates just yet.

Federal interest rates control how much the average person spends on everything from mortgages to credit cards. The rate has hovered between 5.25 - 5.5% since last summer; the highest the rate has been in nearly 20 years. Credit card debt alone has Black consumers paying an average 20.6% on their balances.

Interest rates aren’t only affecting Black people who hold credit cards. High rates are causing distress for anyone shopping for a new home. Interest rates on mortgages have jumped nearly 4% from a low of 3.85% in March 2022 to just over 7% this week. Couple these numbers with higher food prices, and it’s easy to see that Black families are hurting.

Interest rates may not seem like a big deal, but how the Federal Reserve adjusts them determines how much the average Black American has to spend. Prolonged high interest rates will likely require more belt-tightening.