Economic News
Federal Reserve Lowers Interest Rates by Another Quarter Point
In a move that was widely expected, the Federal Reserve voted to lower interest rates again.
About the cut:
This afternoon, Federal Reserve chairman Jerome Powell announced that the agency had voted to lower interest rates by a quarter-point (or 25 basis points). The move is the second reduction this year, although the September cut was larger, coming in at half a point.
Beyond these two cuts, the Fed is expected to continue to lower rates in 2025 as inflation cools. However, changes in policy elsewhere in the government could have in an impact on how and when the Federal Reserve adjusts rates.
What they’re saying:
Commenting on the decision to cut rates, Powell stated, “The latest economic data have been strong, and that is, of course, a great thing and highly welcome. But, of course, our mandate is maximum employment, price stability, and we think that even with today’s cut, policy is still restrictive. We understand it’s not possible to say precisely how restrictive it is still.” As CNN notes, despite the continued impacts of inflation, Powell said, overall, “The economy is performing well.”
My thoughts:
In the past, I was one to often bemoan rate changes rather than celebrate them. That’s because, at the time, my wife and I didn’t carry any debt, so lowered rates just meant we’d be earning less from our savings accounts. However, now that we’re homeowners with a mortgage just shy of 8% APR, I’ve been keeping a close on these cuts as we hope to refinance as soon as it makes sense to do so. Not only can I imagine that there are other homebuyers in similar situations but also realize that these cuts could be beneficial to those with other types of debt.
Of course, while I believe this move would have happened regardless, it’s impossible not to mention this week’s election and its role with the Fed. One can’t help but wonder if, had this cut come even a week earlier, some might be decrying “election interference.” While we no longer have to worry about such a scenario, it does remain to be seen how Powell will be viewed in a second Trump term. So far, the former and incoming president has indicated that he’ll “likely” allow Powell to serve out his term (which is set to end in mid-2026) while Powell notes that firing him would not be permitted under the law. We’ll have to see how that plays out alongside other potential cuts going forward.
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