President Donald Trump has been pushing the Federal Reserve to cut interest rates. The logic is that rate cuts could reduce borrowing costs for consumers and businesses, thereby boosting economic growth.

But the Fed is unlikely to cut interest rates anytime soon, thanks to stubbornly elevated inflation. If anything, the Fed may have to contemplate an interest rate hike at some point this year.

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If you're retired, you may be wondering what sort of impact a rate hike might have on you. The answer is, it depends greatly on your financial situation.

Rate hikes could be a positive thing for retirees

For some retirees, interest rate hikes could be a breath of fresh air. It's common for retirees to keep at least some of their money in safe assets like savings accounts, money market funds, certificates of deposit, and short-term Treasury securities. All of these would likely see higher yields if the Fed raises rates.

Rate hikes could also be a negative thing

On the other hand, if the Fed raises interest rates, borrowing costs will likely increase across the board. And retirees carrying debt could feel a big financial squeeze.

Although the Fed does not set consumer interest rates directly, rate hikes could lead to higher:

• Credit card interest rates
• Home equity loan rates
• Auto loan rates

Retirees living on fixed incomes may find it harder to manage new or existing debt if rates move higher.

Social Security wouldn't immediately change

One thing you may be wondering is how a Fed rate hike might impact Social Security. On the surface, a rate hike shouldn't affect your benefits directly.

That said, a Fed rate hike could lead consumers to borrow less and therefore spend less. That could reduce inflation, leading to a smaller cost-of-living adjustment (COLA) in 2027.

Of course, that's not necessarily a bad thing. The purpose of rate hikes is to keep inflation -- and prices -- from soaring. If inflation cools and prices come down, what retirees lose in the form of a smaller Social Security COLA in the new year, they might gain in the form of lower costs.

All told, we don't know exactly what interest rate decisions the Fed will make this year. While there's certainly pressure to cut rates, elevated inflation actually could make a rate hike more likely. But either way, if you're retired, it's crucial to understand how actions on the part of the Fed might impact you, whether directly or indirectly.