Consumers soon will benefit from Fed’s patience

NEW YORK» So much for those worries about rising interest rates.

Just a few months ago, rising rates were bearing down on everyone from homebuyers to stock investors after the Federal Reserve put through seven quarter-point increases in 2017 and 2018.

This year, the Fed has changed course. In January, it opened the door to a “patient” approach to further rate increases. Then the central bank surprised the market Wednesday, when it said it may not raise rates at all in 2019.

The move — or anticipated lack of moves — reverberated immediately through the bond market, and the yield on the 10-year Treasury note tumbled to its lowest level in more than a year.

It fell as low as 2.52 percent, down from 2.61 percent late Tuesday and from more than 3.20 percent as recently as November, as traders priced in expectations for a slower economy and tame inflation, as well as this very patient Fed.

The impact should filter out soon to consumers across the economy, and the effects likely will remain for a while.

The yield on the 10-year Treasury, which influences rates for all kinds of consumer loans, could drift higher over the next year, but it’s not likely to cross above 2.75 percent, said Ed Al-Hussainy, senior currency and rates analyst at Columbia Threadneedle Investments.

That would mean rates for the next year would remain lower than they have been for much of the past year.

“The Fed no longer has an appetite for tightening rates above” a level that would slow the economy, Al-Hussainy said. “That signal is quite strong right now and lowers the ceiling for 10-year yields.”

Here is a look at some of the move’s beneficiaries:

Borrowers

When the Fed was busy raising interest rates for much of the past few years, rates on credit-card borrowing were quick to follow.

Experts say these rates are the most sensitive to changes in the federal funds rate, so the Fed’s move Wednesday should bring relief, at least from further increases.

The average rate on credit-card accounts that were charged interest was 16.86 percent in the last three months of 2018, according to the Federal Reserve. That’s up from 14.99 percent a year earlier.

“The pause by the Fed will be a relief for those carrying large credit card balances as it will keep their payments from rising further,” said Chris Gaffney, president of world markets at TIAA Bank.

Homebuyers, homeowners