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Anyone hoping for cheaper financing in the few months may find themselves waiting.

But how long the wait may last is now an open question.

Yesterday, members of the Federal Reserve’s rate-setting committee indicated they expect elevated inflation to persist in the short run — and as a result project that the central bank’s key interest rate could go up by the end of this summer.

That rate, known as the Fed funds rate, influences other borrowing rates throughout the economy, including for credit cards and auto loans.

At the same time, new Fed Chairman Kevin Warsh indicated that higher rates are weighing on activity in the real estate and housing markets. He called the impact of current monetary policy “uneven.”

With oil prices — a key inflation input — now falling as the war with Iran deescalates, Warsh may be able to avoid a rate hike this year — and could even fulfill President Donald Trump’s goal of lower interest rates.

“If inflation data improves and gets better, they might be able to go a little bit lower in rates and be less restrictive,” said Logan Mohtashami, lead analyst at real estate publication HousingWire.

The bond market already has a sense of how it could play out over time: While borrowing costs for short-term U.S. Treasuries have surged over the past 24 hours, costs on longer-dated ones are falling.

In other words, any increase in borrowing costs could eventually prove to be short lived.

A near-term increase in rates would represent a reversal from the past several years.

The last time the Fed raised its key rate rate was July 2023 in response to inflation stoked during the Covid 19 pandemic as consumers found themselves flush with spare cash.

Over the past three years, however, rates have gradually declined. After a high of 7.8% in the fall of 2023, the average 30-year mortgage rate had fallen to as low as 5.98% at the end of February.

But the war in Iran caused energy prices to surge — and alongside an apparently stabilizing U.S. economy and labor market, mortgage rates began to rise again. As of Thursday, they stood at 6.47%.

Auto loan rates have seen a similar trajectory, peaking in August 2024 at about 8.6%, before falling to about 7.4% in February. It hasn’t gone lower since.

Interest rates on credit card rates, meanwhile, have been stuck above 20% for three years. In February, the most recent month measured by Federal Reserve data, they stood at 21%.

Overall, borrowing costs, including the Fed’s key rate, respond to inflation. But right now, the inflation outlook is uncertain.

Even as the war with Iran winds down and oil prices reverse, tariffs and spending on artificial intelligence continue to push price growth higher, said Krishna Guha, head of economics at Evercore ISI financial group.

Inflation “still needs to show more decisive evidence of downshifting” to avoid a rate hike, Guha said.

The Fed’s inflation projections, released Wednesday, showed its primary inflation gauge likely will stay above 3% for the rest of the year.

But if inflation’s trajectory is moving in the right direction — lower — it will mean a greater likelihood that the Fed can cut rates.

“Right now we have big question marks on inflation,” said Adam Turnquist, chief technical analyst at LPL Financial asset management group. “It’s setting up to be a bumpy ride.”

In his first press conference as chairman Wednesday, Warsh said the Fed was committed to maintaining price stability, meaning taming the rate of inflation.

But he pointedly declined to commit to raising interest rates.

“The good news is we’ll be meeting in six weeks,” he said.