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The Federal Reserve is expected to lower borrowing costs again on Wednesday.
Another quarter-point reduction, on the heels of September’s cut, would bring the federal funds rate to a range between 3.75%-4.00%.
The federal funds rate, which is set by the Federal Open Market Committee, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves do have a trickle-down effect on many types of consumer loans.
The FOMC has also set expectations for another reduction in December, but after that, the path is unclear. President Donald Trump — who has said a pick to replace current Federal Reserve Chair Jerome Powell could come by the end of the year — has repeatedly weighed in on Fed policy, arguing that rates should be sharply lower.
It’s not a given that rates will continue to fall, and even if they do, not all consumer products are affected equally.
‘The Fed is not cutting every single interest rate’
When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans quickly followed suit. Even though this would be the second rate cut in a row, many of those consumer rates are likely to stay higher, for now.
Federal Reserve interest rate cut: what to expect
