What's next for US interest rates?

The Federal Reserve left interest rates unchanged yet again in July, despite continued pressure from President Trump to make cuts. For now,the central bank's overnight borrowing rate remains at a target range between 4.25% to 4.50%. The Fed's decision at its July meeting marked the fifth consecutive time it has opted to hold rates steady following a series of rate cuts that ended last December.

This decision was not, however, one that was unanimously supported by officials at the central bank. "Two Fed governors voted against consensus and supported a rate cut this month," marking the "first time in three decades that has happened," said CNN Business.

What will the Fed do next?

Whether or not the Fed cuts rates later this year largely depends upon "who will bear the burden of tariffs" implemented by the Trump administration, which will in turn "shape the trajectory for inflation and hiring," said The Wall Street Journal.

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One of the two Trump-appointed Fed governors who voted at the July meeting in favor of cutting rates, Chris Waller, contended that "while Trump's tariffs may cause a one-time increase in prices, they're not likely to be a persistent driver of inflation," said NPR. Waller also expressed concern that the "job market may be weaker than the low 4.1% unemployment rate would indicate," said the outlet.

At a press conference following the July meeting, however, Federal Reserve Chairman Jerome Powell reiterated that the central bank would maintain its approach of basing decisions off of the data, deflecting speculation — including from Trump — that it would cut rates at its next meeting in September. "We have made no decisions about September," Powell said. "We don't do that in advance. We'll be taking that information into consideration and all the other information we get as we make our decision."

When is the next interest rate decision?

The Federal Reserve next meets Sept. 16-17. As of the July meeting, the Fed's options remained "wide open," as Powell "made no effort to tee up a September cut, even though he also wouldn't rule it out," said the Journal.

How do interest rates affect the economy?

The Fed uses interest rates to either stimulate or rein in economic activity. Generally, the theory is that "cutting rates decreases borrowing costs, prompting businesses to take out loans to hire more people and expand production," which "in turn, stimulates economic activity and growth," said Investopedia. "Conversely, when the economy is overheating, the Fed may raise rates to cool things down and prevent inflation from spiraling out of control."

What do rate changes mean for your wallet?

Beyond broader economic implications, the Federal Reserve's decisions also hold significance for your finances.

When rates are cut, that provides "some welcome relief for consumers who are in the market for a home or auto purchase, as well as for those carrying pricey credit card debt," said CBS News, by lowering interest rates on those products. On the other hand, rate cuts "could also have a downside of shaving the relatively high returns recently enjoyed by savers," said the outlet.

Meanwhile, when the Fed decides to raise rates, it usually has the inverse effect, in that it will typically lead interest rates on credit cards, auto loans and variable rate mortgages to go up. The good news with rate hikes, though, is that "savings accounts tend to earn more interest," said LendingTree.