According to CNBC, market-watchers expect the Federal Reserve to raise the target federal funds rate by one-quarter of a percentage point on Wednesday as energy prices rise and tensions with Iran persist. The consumer price index climbed again last month, putting annual inflation at 3.4% in August, with higher oil and gas prices a major driver, government data showed. Fed Chairman Kevin Warsh has said he is committed to bringing inflation back to the central bank's 2% target, and a rate increase would be the Fed's first in more than three years.

The report said higher rates would likely push up borrowing costs for consumers and businesses, including mortgages, car loans and credit card debt, while savers could earn more on deposits. Mark Zandi, chief economist at Moody's, said credit card rates, which are already above 20%, would rise to record highs once the Fed moves. WalletHub said the average APR on a 48-month new car loan is expected to rise by about 12 basis points in the months after a 25-basis-point Fed hike.

The article said the 10-year Treasury yield topped 4.95% last week, its highest level since October 2023, and the average rate on the 30-year fixed mortgage moved above 7% for the first time in more than a year. LoanDepot chief investment officer and head economist Jeff DerGurahian said a Fed hike would not automatically lift 30-year mortgage rates if markets had already priced it in and investors viewed the move as a measured step toward 2% inflation. Adjustable-rate mortgages and home equity lines of credit are tied more directly to the prime rate, while federal student loan rates are fixed and private student loan rates can move with benchmarks such as Libor, prime or Treasury bill rates.