The Fed voted to cut interest rates another quarter-point on Wednesday, bringing them down to a range of 3.5 to 3.75%.
Not an easy decision
The move was contentious, with three members voting against the reduction. “There was some controversy around this decision in part because it is such an uncertain time in the economy,” LendingTree’s chief consumer finance analyst Matt Schulz tells KCM. “Prices are still high, the job market is shaky, and people generally feel nervous about what’s next. Also, the recent government shutdown resulted in less data for the Fed to use in its decision-making, which presented a challenge.”
Complicated picture
Fed chair Jerome Powell pointed out that the labor market is cooling, while inflation remains elevated, mostly due to the effects of Trump’s tariffs. On the brighter side, consumer spending has held steady, and A.I. spending has been bolstering businesses.
What this means for you
“The Fed’s rate cut is great news for folks wrestling with debt, but it stinks for savers,” says Schulz. “We’ll see lower interest rates on credit cards and other loans, which is great, but also lower returns on high-yield savings accounts and CDs, which isn’t so great.”
The Fed declined to commit to any January cuts, so stay tuned.
