What the Fed Interest Rate Cut Means for You

October 31, 2019

The Federal Reserve cut interest rates by a quarter-point. This is the third time this year they have implemented a cut, hoping to jump-start a slowing economy.  Lower rates often mean loans become cheaper, and consumers can see an impact in everything from mortgage rates to credit cards. However, the underlying reason for the cuts means that consumers could actually be worse off when it comes to borrowing.

The rate cuts have been implemented because the Fed is worried that the economy is weakening. Fear of a slowdown makes lenders less inclined to lend money, meaning that they may have to charge higher interest rates to hedge against the risk. Furthermore, consumers are likely to earn less interest on their savings, meaning they will lose buying power over time.


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