Powell Shares Tentative Plans for Expected Fed Rate Cuts

Two weeks ago, Central Bank Fed Chair Jerome Powell announced the Fed was cutting interest rates for the first time since the pandemic when the Federal Open Market Committee approved a reduction to the overnight borrowing rate of 50 basis points, or one-half of one percent.

Speaking today in Nashville, Powell stated that he and Fed officials seek to reduce rates further. This means we could see additional quarter-point cuts this year as early as November 6–7 and up to 0.5% total by the end of December. The rate reductions aim to bring the inflation rate down to the federal target of 2% while still supporting the labor market.

The cut in September was expected to be significant. However, Powell was careful to point out that the aggressive rate reduction last month shouldn’t be indicative of future aggressive moves or steep cuts this year. “Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course,”

“Recalibrating” and heading to “a more neutral stance” were the terms used by Powell instead of anything mentioning rapid or substantial interest rate cuts beyond 0.25%.

What If I’m Considering Borrowing Money?

Banks set their interest rates in alignment with Federal Reserve rates and competitive market conditions, taking into account a borrower’s creditworthiness, which is assessed by their credit score, income, and other financial details.

Interest rates for personal loans vary widely, averaging around 12.42% as of September 2024, but can range from 8% to 36%, depending on several factors. These factors include the borrower’s credit score, the type of lender, loan terms, and geographic location. Borrowers with excellent credit typically receive the lowest rates, while those with poor credit may face rates over 30%.

So, while the news is good regarding interest rate cuts from Powell, the more important factors regarding the cost of borrowing money are more controllable.

Personal Loan and Refinancing Options

Despite a lack of massive interest rate cuts expected anytime soon, now is a great time to consider reevaluating your finances and debt situation.

Financial products to consider include:

• Opt for a personal loan solution: Personal loans, such as those offered by Credible can provide quick cash for unexpected expenses or major purchases. Personal loans generally feature lower interest rates than credit cards.
• Consolidate debt: If you’re carrying more debt than you’d like or your debt is beginning to feel overwhelming, a debt consolidation loan can simplify budgeting and potentially lower your borrowing costs.
• Use balance transfer cards: Take advantage of low introductory rates on credit cards to consolidate other higher-interest card debts.