Traders expect Fed rate hike in December, raising 2027 borrowing costs

The Federal Reserve held its benchmark interest rate steady on October 28, but market traders are pricing in an 85% probability of a quarter-point hike at the December meeting. A Reuters survey of 100 economists indicates that all respondents expect the central bank to raise rates at that time.

The Fed is targeting a 2% inflation rate, though consumer prices rose 3.7% over the year through September. Higher benchmark rates are intended to cool spending and business investment, but they will increase the cost of borrowing for households entering 2027.

While existing fixed-rate mortgages will not change immediately, higher rates will likely increase monthly payments for new home loans, auto financing, and personal loans. Variable-rate credit card balances will also become more expensive to carry, leaving less money for other household expenses.

Read the full story at moneylion.com.