"The Federal Reserve cut its benchmark interest rate by a quarter point Wednesday for the second time since September. Before that, it had gone nine months without a cut.The federal funds rate is the rate at which banks borrow and lend to one another. While the rates consumers pay to borrow money aren't directly linked to this rate, shifts affect what you pay for credit cards, auto loans, mortgages, and other financial products."
""While the full economic impact of such a move will unfold over time, early indicators suggest that even modest rate cuts can have meaningful consequences for consumer behavior and financial health," said Michele Raneri, vice president and head of U.S. research at credit reporting agency TransUnion.The Fed has two goals when it sets the rate: one, to manage prices for goods and services, and two, to encourage full employment."
The Federal Reserve reduced the federal funds rate by a quarter point, the second cut since September after a nine-month pause. The federal funds rate influences bank borrowing and lending and indirectly affects consumer rates for credit cards, auto loans, mortgages and other financial products. Modest rate cuts can change consumer behavior and financial health, according to TransUnion. The Fed balances controlling inflation and promoting full employment while facing inflation above its 2% target and a weak job market. A government shutdown has hindered economic data collection. The Fed projects another rate cut before year-end, and falling rates will reduce yields on CDs and high-yield savings accounts.
Read at Fast Company
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