The first rate cuts since March 2020 will broadly make borrowing less expensive.
Topline
The Federal Reserve is widely expected Wednesday to announce its first interest rate 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 results of the Fed’s policy-setting committee’s two-day meeting will come out at 2 p.m. EDT, with the central bank all but guaranteed to announce the first cut to the federal funds rate since March 2020.
A cut will bring the federal funds rate down from the 5.25% to 5.5% range it’s sat since last July, which is the highest rates have sat since Jan. 2001.
It’s less agreed upon how big of a cut the Fed will unveil, with consensus split between a 25 or 50 basis-point cut, meaning the market expects rates to settle Wednesday at 4.75% to 5% or 5% to 5.25% ranges.
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.
