What impact a Fed rate cut could have on Wall Street and Main Street
Many are wondering what impact the widely expected interest rate cut at the end of the US Federal Reserve meeting could have.
USA TODAY reported that the Federal Reserve is preparing for its first interest rate cut since the COVID-19 pandemic began in March 2020.
The Federal Open Market Committee is expected to cut its benchmark interest rate, which is currently at its highest level in 23 years, at its meeting on Wednesday. Although all economists agree that a rate cut will happen, forecasts vary between a cut of 0.25 or 0.5 percentage points.
An additional cut is possible later in November and December.
What impact will this cut have on US citizens?
The Federal Reserve’s decision to cut interest rates will affect U.S. citizens in several ways.
- Cheaper borrowing: The interest rate cut will lower borrowing costs for those looking to finance a home or car purchase. Interest rates on mortgages and auto loans are expected to fall, making it easier and more affordable for consumers to take out these loans.
- Credit card debt: For those who carry high-interest credit card debt, the rate cut could provide some relief by lowering interest rates on revolving credit, potentially reducing monthly payments.
- Impact on savings: On the other hand, savers could expect lower returns on savings accounts, CDs and other interest-bearing accounts. The higher returns savers have enjoyed recently could decline as banks adjust to lower interest rates.
- Future reductions: This cut is expected to be the first of a series of cuts throughout the year and into 2025.
When is the Fed meeting?
The meeting began on Tuesday and will continue through Wednesday. According to the committee calendar, the central bank is scheduled to announce its interest rate decision at 1 p.m. CT, followed by a press conference with Fed Chairman Jerome Powell at 1:30 p.m., where he will discuss the central bank’s economic outlook.
What is the Federal Open Market Committee?
The FOMC is a branch of the Federal Reserve that oversees and directs the country’s monetary policy, particularly managing the country’s money supply and interest rates, the website says.
How to follow the meeting
Several organizations have scheduled live streams of Powell’s press conference, including CNBC.
