After a year of inaction, the Federal Reserve cut short-term interest rates by a quarter-point to a target range of 4%–4.25% on Sept. 17. The decision wasn’t unanimous: new Fed governor Stephen Miran—nominated by Trump—wanted a larger half-point cut. The move comes as the Fed weighs economic uncertainty, weaker hiring, and inflation risks.
The rate cut offers modest relief for borrowers: average credit card rates fell slightly to 19.87%, while mortgage rates may gradually decline, potentially dipping below 6% for 30-year fixed loans early next year. However, savings rates could also drop, with the average one-year CD rate hovering near 2%. Auto loan rates may rise temporarily due to tighter inventory and strong summer sales.
Looking ahead, analysts expect the Fed could implement one or two more quarter-point cuts before the end of 2025, with 2026 rates influenced by inflation trends, economic growth, and fiscal policy.
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