The Fed is slowly walking back past rate hikes


As expected, the Fed cut interest rates a quarter point. It doesn't mean much for the average household, but every little bit helps.

Greg McBride, Chief Financial Analyst for Bankrate.com, says the Fed is undoing some of the rate hikes of the recent past.

"The cumulative effect is starting to grow and what this does is unwind about a third of the increases seen between 2015 and 2018; so it does provide a little bit of relief to household budgets."

But McBride says we're not talking big money.

"The cumulative effect of the rate cuts since July, is now gonna add up to almost $20 a month. Not a huge windfall but for a household with a tight budget, it matters."

McBride says he doesn't see a recession looming, but he won't be surprised by an economic slowdown. McBride says he's not worried about lowering rates when the economy is doing well.

"If the economy does slow sharply they can resume cutting rates, but I think for now their position is three rate cuts will be enough to inoculate the economy from a sharper downturn."

Again, it's not much. The effect on a 30-year mortgage is about $6 a month; a $25,000 car loan payment is down about $3 a month.


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