When the Fed reduces its rate, it often — though not always — leads to lower costs for consumer and business borrowing, including for mortgages, auto loans, and credit cards. Yet financial markets also influence the level of longer-term rates and can keep them elevated even if the Fed reduces the shorter-term rate it controls.

The Fed, helmed by Chair Jerome Powell, is expected to hold rates steady this month despite pressure from President Donald Trump to make cuts.

There are good reasons to think the Federal Reserve would be preparing to cut interest rates this week due to recent improvements on inflation—if not for [the risk that tariffs pose to prices](