ORLANDO, Fla. – The Federal Reserve began its two-day policy meeting on Tuesday. News 6 Investigator Donovan Myrie spoke with CBS News business analyst Jill Schlesinger about the Federal Reserve’s next move.
What is the Fed expected to do?
“I believe — as do most economists — that the Fed will drop a quarter of a percentage point interest rate cut. That would be the first cut since last December. Although the labor market is weakening, we’ve seen consistent economic growth. A half-percent cut could risk fueling the economy too much. Just this morning, a retail sales report showed robust consumer spending, so a quarter-point cut is what I expect.”
What will this mean for borrowers?
“It’s a little bit of help, a step in the right direction. Interest rates on credit card balances and auto loans should come down, though they remain high due to recent years. While the Fed doesn’t control home loan rates, those are also coming down as people anticipate lower rates. Thirty-year mortgage rates have slid to 6.35%, the lowest level this year.”
How about savers and retirement investors?
“Savers might be a bit bummed after a good run over the past three years. They’ll see slightly less interest on savings and money market accounts, but online rates for safer accounts still range from 3.5% to 4%. For investors, it’s an interesting story. Despite high interest rates, stock market indexes have hit new highs, driven by strong corporate earnings, especially in tech. But before celebrating your 401(k) gains, remember the party may end temporarily. The key to being a sane long-term investor is having a plan that accounts for both good and bad times.”
The Federal Reserve is expected to make an announcement on interest rates on Wednesday afternoon.