What a possible Fed rate cut would mean for your finances

"The Federal Reserve is expected to cut its benchmark interest rate Wednesday for the first time in nine months. Since the last cut, progress on inflation has slowed while the labor market has cooled. That means Americans are dealing with both high prices and a challenging job market. The federal funds rate, set by the Federal Reserve, is the rate at which banks borrow and lend to one another."

"The Fed has two goals when it sets the rate: one, to manage prices for goods and services, and two, to encourage full employment. This is known as the dual mandate. Typically, the Fed might increase the rate to try to bring down inflation and decrease it to encourage faster economic growth and more hiring. The challenge now is that inflation is higher than the Fed's 2% target but the job market is weak, putting the Fed in a difficult position."

"For prospective homebuyers, the market has already priced in the rate cut, which means it's unlikely to make a noticeable difference for most consumers at the time of the announcement, according to Bankrate financial analyst Stephen Kates. Much of the impact on mortgage rates has already occurred through anticipation alone, he said. (Mortgage) rates have been falling since January and dropped further as weaker-than-expected economic data pointed to a cooling economy."

The Federal Reserve is expected to cut its benchmark federal funds rate for the first time in nine months due to slowing inflation progress and a cooling labor market. Inflation remains above the Fed's 2% target while employment has weakened, creating a policy trade-off between price stability and full employment. The federal funds rate determines interbank borrowing and lending and shifts in Fed policy influence consumer borrowing costs for credit cards, auto loans, mortgages and other products. Mortgage rates have been falling since January and the market has largely priced in the anticipated cut, so relief will materialize gradually for borrowers.

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