The first rate cuts since March 2020 will broadly make borrowing less expensive.
Topline
The Federal Reserve took the widely expected step Wednesday of announcing its first interest rate cut in years, a move that will have a major impact on the finances of Americans across the board, making borrowing cheaper, though the golden days of high-yield savings instruments may be over. Key Facts
The Fed’s policy-setting committee cut the federal funds rate by 50 basis points, the more aggressive move as consensus was split between a 25 or 50 basis-point cut.
It’s the first cut to the federal funds rate since March 2020, bringing rates down to 4.75% to 5% from the 5.25% to 5.5% range they’ve sat since last July, the highest rates had been since 2001.
The Fed pivot follows the continued moderation of inflation, which caused rates to spike in the first place.
What Do Fed Rate Cuts Do?
The Fed only officially controls the federal funds rate, which determines the interest charged in overnight cash reserve transactions between banks.
