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Tag: interest rates

  • The Fed Will Vote on Interest Rates Fewer Times in 2027 and 2028

    The Fed Will Vote on Interest Rates Fewer Times in 2027 and 2028

    Introduction
    The United States central bank will meet less often to vote on interest rates. The Fed is the central bank. It is like the bank for other banks. Its choices affect how much it costs to borrow money. That matters for homes, cars, and credit cards.

    What Happened
    The Fed will hold seven rate-setting meetings in 2027. It will hold six in 2028. That is down from the usual eight meetings a year. The change was announced last week. Kevin Warsh is the Fed chair. Chair means the top leader. He has led the Fed since this year.

    Interest rates are the extra money you pay when you borrow. A rate-setting meeting is a meeting where the Fed votes on that cost. Fewer meetings mean fewer chances to change the rate in a year.

    Why It Happened
    The Fed wants to think in a longer way. Warsh said the Fed should not react to every small piece of news. A longer view can help the Fed make calmer choices. The Fed also plans to meet in January, March, May, July, September, and November in 2028. It will skip some months.

    In 2027, the Fed will still meet seven times. That is one less than usual. In 2028, it will meet six times. That is two less than usual. The Fed said this is about a new way to work, not about one single decision.

    Why It Matters
    Interest rates touch daily life. When rates go down, borrowing can get cheaper. When rates go up, borrowing can get more costly. Loans are money you borrow and pay back later. Mortgages are loans to buy a home. Credit cards let you borrow money to buy things now and pay later.

    Last week, the Fed cut its key rate to a range of 3.50 percent to 3.75 percent. That was the second cut this year. The first cut came in September. The Fed has cut rates two times this year. Lower rates can help people who borrow. But they do not change every loan at once.

    Key Figures

    • Usual Fed meetings each year: 8.
    • Fed meetings planned for 2027: 7.
    • Fed meetings planned for 2028: 6.
    • Current key rate range: 3.50 percent to 3.75 percent.
    • Rate cuts this year: 2, in September and last week.
    • Average credit card interest rate in August: 19.91 percent. That is the extra cost on credit card borrowing.

    What Happens Next
    People will watch the next Fed meeting in December. The Fed has not said if it will cut rates again then. Some people think a cut is possible. Others think the Fed will wait. With fewer meetings, each meeting may feel more important. Borrowers may need to wait longer between possible rate changes.

    Final Thoughts
    Fewer meetings do not mean the Fed will stop working. It means the Fed will vote less often. For families, the lesson is simple. Do not count on a fast rate cut. Plan for the loan you have today. Watch each meeting, but do not rush a big choice because of one meeting.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, https://www.cnbc.com/2026/11/02/fed-rate-votes-consumer-borrowing-costs.html ; The New York Times, https://www.nytimes.com/2026/10/28/business/economy/fed-meetings-2027-interest-rates-warsh.html

  • I Bond Rate Jumps to 5.51% — and Its Fixed Rate Is the Highest in 20 Years

    I Bond Rate Jumps to 5.51% — and Its Fixed Rate Is the Highest in 20 Years

    Introduction

    The US Treasury has set a new interest rate for Series I savings bonds: 5.51% for the next six months. That is up sharply from the previous rate of 4.26%, and it is the highest I bond rate since November 2022. For savers, the more important number may be hiding underneath it.

    What Happened

    The Treasury announced the new combined rate of 5.51% on Friday, October 30. It applies to I bonds bought from November 1, 2026 through April 30, 2027, and the rate is locked in for six months from the date of purchase.

    The combined rate has two parts. The first is a fixed rate, which stays with the bond for its entire life of up to 30 years. The second is an inflation rate, which resets every six months based on actual inflation. For this round, the fixed rate is 1.4% and the inflation part works out to 4.08% on an annualised basis. Combined using the Treasury’s formula, that gives 5.51%.

    The 1.4% fixed rate is the real headline. It is the highest fixed rate on I bonds since November 2006 — nearly 20 years. The previous fixed rate was 0.90%.

    Why It Happened

    The jump comes mostly from inflation. Over the six months from April to September, consumer prices rose 2.04%, which translates into the 4.08% annualised inflation part of the rate. Consumer prices overall rose 3.7% in September 2026 from a year earlier, up from 3.4% in August.

    The fixed rate is different: the Treasury sets it based on market conditions, and it chose to raise it to 1.4%. That decision matters far more than a single six-month rate, because the fixed rate never changes for as long as you hold that bond.

    Why It Matters

    Think of an I bond as two promises stacked together. The fixed rate is a guaranteed return above inflation, for up to 30 years. The inflation part makes sure your money keeps its purchasing power. Put together, you get a return that rises when inflation rises — something regular savings accounts and most bonds do not offer.

    At 5.51%, the starting rate is also higher than what short-term government bills are paying right now, at around 4.11%. And I bond interest is exempt from state and local taxes, though federal tax still applies.

    There are limits, though. You can only buy $10,000 of I bonds per person per calendar year through TreasuryDirect, the government’s official site. You cannot sell for the first 12 months, and if you sell before five years, you lose the last three months of interest as a penalty.

    What Happens Next

    Anyone who already used up their $10,000 limit for 2026 will have to wait until January to buy more — but they will still be in time, because the 5.51% rate runs until the end of April 2027. Buying later in the window still earns a full six months at that rate, and the 1.4% fixed rate stays for the life of the bond.

    One practical tip that experts repeat: if you buy in November, you earn a full month of interest no matter which day of the month you buy. So there is no rush to buy on day one.

    The next reset comes on May 1, 2027. At that point, the inflation part will change again, but the 1.4% fixed rate on bonds bought now will not.

    Final Thoughts

    The 5.51% rate will grab attention, but the 1.4% fixed rate is the part that could matter for decades. A bond bought in this window keeps that fixed rate above inflation for up to 30 years. For a saver who wants a safe, inflation-protected place for money they will not need for at least a year, this is one of the strongest I bond deals in 20 years. Just remember the limits: $10,000 a year, one year locked in, and a penalty for early exit before five years.

    Key figures

    • New combined rate: 5.51% (was 4.26%)
    • Fixed rate: 1.4% (was 0.90%; highest since November 2006)
    • Inflation part: 4.08% annualised
    • Applies to: bonds bought November 1, 2026 – April 30, 2027
    • Annual purchase limit: $10,000 per person
    • Lock-in: 12 months; 3-month interest penalty if sold before 5 years

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC — https://www.cnbc.com/2026/10/30/treasury-i-bond-rate-through-april-2027.html — and Money coverage of the new rate; TreasuryDirect rate information.

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