HAMPTON ROADS, Va. — For the first time in four years, the Federal Reserve is cutting its benchmark interest rate. It's a step that should lead to lower borrowing costs for consumers and businesses just weeks before the presidential election and will help the finances of millions of Americans.
Now that the Federal Reserve has made clear it will be cutting interest rates, it will need to decide whether to opt for a modest quarter-percentage-point rate cut, or a more aggressive half-a-point cut.
Whatever the size of the cut will be the Federal Reserve first-rate reduction since 2020 would provide some welcome relief for individuals who are in the market for a home or car, as well as those carrying pricey credit card debt.
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Auto loan rates are likely to see reductions after the rate cut, according to economist experts. That could convince some consumers to start shopping around for a vehicle.
For potential home buyers, economist say this could be the right time for sidelined home-buyers to enter the market, because housing affordability is expected to improve while inventory is scaling back up, giving buyers more choices.
Though benchmark interest rates and mortgage rates are not directly linked, mortgage rates are likely to continue their downward trend. When it comes to the Federal Reserves cutting interest rates, this means business spending could grow, and so could stock prices. Companies and consumers could refinance loans into lower-rate debt.
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