The Federal Reserve Is Lowering Rates — Here’s What To Know
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On Wednesday, the Federal Reserve announced that it reduced its key rate by an unusually large half-percentage point, to between 4.75 and 5 perfect.
This is the first rate cut in more than four years. The central bank is acting because after imposing 11 rate hikes dating back in March of 2022, inflation is finally at a mild enough state where it can begin to ease the cost of borrowing.
At the same time, the Fed has grown more concerned about the health of the job market. Lower rates would help support the pace of hiring and keep unemployment down.
More Fed rate cuts are expected in the coming months.
If you are a person who has a savings account, the yields for savers will decline as the Fed lowers its benchmark rate. For owners with a mortgage, the benchmark rate does not have a direct effect on mortgage rates. However, mortgage rates have already declined ahead of the Fed’s predicted cut.
For car loans, it is predicted that the rate cuts and the avoidance of recession will lead to lower auto loans rates for borrowers with strong credit profiles.
The rate at which the Fed continues to cut rates after September will depend in part of what happens next with inflation and the job market.
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