;)
The Fed’s role is to maintain stability and “alleviate crises” in our financial system. Historically, they have issued rate increases to stabilize a booming, lending-heavy, high-inflation economic climate. Inversely, the Fed has lowered rates to stimulate spending in a recessed, stagnant economy.
What is both interesting and historic about this rate decrease is that the economy currently seems to be stable; borrowing is steady, unemployment is low, and inflation is relatively steady, meaning that the Fed is lowering rates simply to prevent the economy from slowing down.
According to the Washington Post, this decision is the result of other factors economists believe to have a potentially negative influence our financial climate, such as the ongoing trade tensions with China and less-than-ideal inflation rates.
Additionally, pressure by President Trump to lower rates and The Fed’s desire to be preemptive rather than reactive to economic shifts is also said to have an heavy influence on today’s decision.
Because lower interest rates are designed to stimulate the economy, this is good news for anyone with debt or looking to get a loan.
This is also a great time to refinance, especially for borrowers who recently took out a loan within the last year or so, as rates are likely lower than those available at the time the loan was generated. Though it is unlikely the U.S. will see a 0% interest rate like was available in the past, this cut will still reduce pressure on car shopper finances.
If you have investments, this cut could benefit you there, too. A surge in stock prices tend to accompany rate cuts, meaning that the value of your investments may increase.However, with new rate cuts comes increased potential for risky lending. Though the difference in rate is only minimal, it is still important for borrowers to avoid predatory loans by making sure they can afford the payments and understand the terms.
Overall, this rate cut can be great new for many Americans who want to create some wiggle room in their budget. Pay down debt, refinance, start saving, and enjoy the break on your wallet.
When you buy a car, whether new or used, one of the most important documents you’ll need is the title. The title, also known as a certificate of ownership, is proof that you are the vehicle’s legal owner. However, not all cars have titles, which may leave you wondering if purchasing a car without a…
Before agreeing to cosign on a car loan, it’s important to understand the risks. Doing the favor of cosigning on someone’s auto loan can help them qualify for the car they want — but whether you should cosign isn’t a decision to make lightly. As a cosigner, you’re responsible for…
Taking over someone's car payments isn't easy or always possible. Here's what you need to know. Owning a car can be expensive. In fact, the latest data from AAA shows that the average yearly cost to own and operate a new vehicle in 2023 is $12,182 or $1,015 per…