A Recap of Economic Data from a Monetary Perspective: How the Fed Keeps Inflation in Check

The Federal Reserve continues to walk a tightrope—balancing inflation control with economic stability. The latest G.19 consumer credit report (March 2025) offers key insights into how borrowing trends align with the Fed’s monetary policy strategy. 

With signs of slowing consumer demand and persistently high lending rates, the Fed’s actions seem to be taking effect.

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Key Takeaways

• Consumer credit increased 2.4% annually in March 2025.
• Revolving credit rose 1.7%, while nonrevolving jumped 2.7%.
• Credit card rates remain elevated at over 21%.
• Auto loan and personal loan rates stay above 8% and 11% respectively.
• The data reinforces a cautious stance from the Federal Reserve.

Consumer Credit Trends Signal Moderation

In March, the total consumer credit outstanding reached $5.006 trillion. Revolving credit, like credit cards, grew to $1.32 trillion, while nonrevolving credit—including auto and student loans—rose to $3.68 trillion. 

The slowdown in borrowing points to greater financial prudence amid higher costs of debt.

Interest Rates Reflect Fed’s Tight Policy

Commercial bank loan rates remain elevated across categories. The average interest rate for a 60-month auto loan is 8.04%, and credit cards are charging 21.91% APR on interest-bearing accounts. These figures align with the Fed’s restrictive policy aimed at cooling demand.

Inflation Control Still on Track

With inflation no longer surging and credit expansion slowing, the Fed's tools appear to be working. The modest growth in nonrevolving loans shows consumers are not overextending themselves, suggesting that rate hikes are achieving the desired cooling effect.

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Market Impact and Policy Outlook

The credit data supports a hold-steady approach for the Fed. Markets may interpret this as a sign that no further rate hikes are imminent. However, actual rate cuts may not come until inflation returns decisively to target or the labor market weakens.

FAQs

Why does the Fed watch consumer credit data?

Because borrowing behavior reflects overall demand, which is a key driver of inflation and economic growth. Slower credit expansion often signals successful monetary tightening.

What’s the difference between revolving and nonrevolving credit?

Revolving credit includes open-ended borrowing like credit cards. Nonrevolving credit includes fixed-term loans like car or student loans.

Could this data lead to a rate cut?

Not yet. While the data supports patience, the Fed will likely wait for more definitive signs of inflation reduction and economic softness before cutting rates.