Fed cuts rates for first time in 4 years on September 18

The Federal Reserve is poised to implement its first interest rate cut in over four years during its meeting on September 18, 2024. Economists are divided on the extent of the cut, with predictions ranging from a standard reduction of 0.25 percentage points to a more significant 0.5 percentage points. This decision comes as inflation has decreased below 3% annually and signs of labor market weakness have emerged, prompting the Fed to reassess its monetary policy. The anticipated rate cut is expected to provide relief for consumers looking to purchase homes or cars, as well as those managing high credit card debt. However, while mortgage rates have surged in recent years, experts suggest that a Fed rate cut may not immediately drive consumers back into the market. Instead, it may encourage hesitant buyers to consider making purchases, especially with seasonal promotions from automakers. Credit card rates, which have reached historic highs, are also likely to follow suit with the rate cut. However, the impact on individuals carrying balances may be minimal, with potential savings being less than $1 a month for those with significant debt. Financial experts recommend focusing on paying down debt or exploring options like zero-percent balance transfer cards. Additionally, the rate cut could lead to a decrease in savings account rates, with predictions of drops up to 0.75 percentage points. As a result, consumers are advised to lock in current rates for CDs before the cuts take effect, as the overall financial landscape is expected to shift significantly in the coming months.