Arabic version: رفع الفائدة من الاحتياطي الفيدرالي قد يزيد تكاليف اقتراض المستهلكين

According to Cnbc, a September Federal Reserve rate hike remains “firmly in play” before the release of July’s consumer price index report on Aug. 12. The central bank has held rates steady throughout the year while officials weighed inflation that remains well above its 2% target. Last month, a 9-3 majority voted to maintain the benchmark borrowing rate at 3.5% to 3.75%.

A weaker-than-expected jobs report has not removed the prospect of higher rates. Bank of America Global Research said in an Aug. 7 note that July inflation data was expected to show another modest increase. Market pricing indicates the Fed could raise rates as soon as September, although the odds are higher for an October move, according to the CME Group’s FedWatch gauge.

If the Fed raises rates, borrowing becomes more expensive for consumers. Mortgage, auto-loan and credit-card borrowers can face higher costs, while shorter-term consumer debt rates are generally closely tied to the prime rate, typically 3 percentage points above the fed funds rate. Longer-term borrowing costs depend more on inflation expectations and other economic factors.

Fixed mortgage rates have moved higher as bond yields rose overall since Kevin Warsh took over from now-Governor Jerome Powell on May 22. Brett House, an economics professor at Columbia Business School, said higher long-maturity bond yields reflect investor concerns that inflation remains above the Fed’s target.

Higher interest rates can also slow spending and borrowing, cooling the economy and easing inflation pressure. Mark Hamrick, an economic analyst and founder of The Hamrick Brief, said the outlook is for rates to remain higher for longer and potentially rise further. He also said consumers have not received the break from inflation they have been seeking, with some relying on borrowing when savings are insufficient.