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Fed Cuts Interest Rates: How Does it Impact You?

Fed Cuts Interest Rates: How Does it Impact You?

The Federal Reserve on Wednesday cut the benchmark interest rate by 25 bps, the first cut in 11 years and one that has caused some market disruption already. The new short-term range will be between 2% and 2.25%. The Fed is in charge of monetary policy and is headquartered in Washington DC. The Chair and Vice-Chair are appointed for four-year terms and can be reappointed.

Keep in mind that the nation that the US was forced to cut rates implies that the US economy is under some pressure while at the same time, the Fed Chair Powell said that it was an adjustment. Likely the Fed cut was to give some support to Trump and the China trade talks – giving the US economy a boost as it slows down to 2.1% for Q2 in the recent report, slower than 3.15 in Q1

The Federal Open Market Committee (FOMC) cited, “implications of global developments for the economic outlook as well as muted inflation pressures.” This cut will be good for those with credit card debt but credit card holders should call and ask for lower rates. There may be some changes in in things like money market fund and CD deposits. There also may be some movement in variable-rate products like adjustable-rate mortgages or ARMs and home equity lines of credit which are based on short-term interest rates.

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