The much-awaited action will affect millions of Americans and even people worldwide in terms of credit card, mortgage, and savings rates.
Until the announcement, we won’t know just how much the Federal Reserve will cut rates or how far they might drop.
What does this signify to you, then?
What does it mean to “cut” your debt—auto loans, mortgages, and other liabilities?
The base rate that US corporations charge consumers for loans, such as mortgages, or other debt, such as delinquent payments, is established by the Federal Reserve’s key lending rate, which it costs banks to borrow.
After rising from almost zero at the beginning of 2022, the rate has been circling 5.3% for more than a year—the highest since 2001.
A drop will provide much-needed relief to borrowers, but it’s likely to force some banks to lower the rates they give savers as well.
In the US, mortgage rates have already somewhat decreased, in part because of this change.
