The US Federal Reserve has slashed the interest rate by 25 basis points or a quarter point or 0.25%, for the third time in a row, signalling a bounceback of the economy and lowering concerns over inflation and the potential impact of Donald Trump’s policy decision. This is backed by data from the US Central Bank, which has said that recent indicators suggest that the economy is on its way to recovery. Although the economic activities have continued to expand, the inflation remains somewhat elevated.
The Fed said in a statement, “Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the 2% objective but remains somewhat elevated.” The inflation cuts have significantly affected the markets. Let’s have a look.
Auto Rates: Auto rates and car prices have been trending lower, but they still remain elevated as compared to rates before the inflation rise and economic shutdown.
Credit cards: The interest rates you would pay on any dues you have should fall after the fed cut is acted upon, though it will not be instant and it might also vary depending upon your card issuer. According to Bankrate, the interest rate on credit cards was 20.35 per cent last week.
Mortgages: Mortgages have been quite volatile recently. They were at 7.08% last year and got all the way down to 6.8% in September.
Saving Accounts and Cash Deposit: The rate cuts might disappoint the savers in the population who have been enjoying the benefits from juicer yields on their savings.
Student Loans: The student loan will remain somewhat unaffected by the fed rate cuts as the student loan interest is decided on the 1st of July every year and is fixed for the life of the loan.
