September 18, 2024
“The US economy is in a good place and our decision today is designed to keep it there the economy is growing at a solid pace inflation is coming down closer to our 2% and labor market is still in solid shape and our intention is to maintain the strength and we’ll do that from returning rates at the high level move those back down to amore normal level over time.”
Yes the Federal Reserve chairman announced a huge half point interest rate cut for the first time in four years today – and that absolutely will have effects on your everyday life – which I’m going to discuss in this video…but don’t be confused –this big rate cut is not the fed declaring mission accomplished over inflation. Yes – it’s down – but The Fed says it’s not down enough.
Also before I get into this I want to make clear the Fed chairman again today said decisions about interest rates have nothing to do with the election. I have a whole separate video you’re going to want to watch about that…but I want to keep this video about what’s happening with your money.
Yes – 0.5% interest rate cut impacts lots of things. It makes borrowing money a little cheaper for average Americans and for businesses. That means your credit card rates will likely start coming down, new car loan rates will start coming down, personal loan rates will come down, your adjustable mortgage rate will start coming down. Yes this also impacts new fixed mortgage rates though the market has already priced in today’s rate cut and as I’ve been reporting we’ve already started to see those 30-year fixed rates go down.
So you’re probably wondering if the inflation problem isn’t fully solved then why did the Fed cut interest rates today?
Well – because the Fed has a dual mission. To keep prices stable – but also to ensure maximum employment. To keep prices stable the Fed needs to keep inflation under control and keep prices increasing at only 2% every single year. The last inflation report said inflation was at 2.5% year over year. So the Fed was like yep – our plan to keep interest rates high so the economy cools off has been working. But on the flip side we also saw recent reports about the unemployment rate starting to tick up and employers starting to hire less. See interest rates also impact the jobs market. And some think the fed waited too long to cut rates and the high cost of borrow money is not only hurting average Americans but now – also hurting businesses. And we’re seeing it manifest specifically in the higher unemployment rate and the lower hiring rate. The fed chairman says they are not late to the game.
“We don’t think we’re behind we think this is timely but I think this is a commitment not to get behind.”
