The Brief

• The Federal Reserve cut lending rates to between 4% and 4.25% on Wednesday to stimulate economic growth

• The rate reduction will lower costs for credit cards and loans, giving consumers more purchasing power

• Two additional rate cuts are expected later this year, with experts recommending consumers review their outstanding debt

LA CROSSE (WKBT) — The Federal Reserve announced a rate cut Wednesday, bringing lending rates down to between 4% and 4.25%. It’s the first time rates have been cut this year. 

The cut is designed to keep the economy growing by making it less expensive to borrow money. 

“Recent jobs report came out that the job market is a little bit sluggish. By cutting interest rates, they’re essentially making it cheaper for businesses and for individuals to borrow money,” said Ben Gibson, a Financial Planner at La Crosse Financial Planning. 

The good news for consumers is it will bring down rates for credit cards and loans. While the Federal Reserve doesn’t directly control mortgage loan rates, Gibson noted that mortgage rates began declining before the official announcement. 

“When the Federal Reserve drops their rates it kind of has this waterfall effect,” said Gibson. “We knew rates were going to come down, so the banks have already priced that into mortgages dropping,” Gibson said.

The Fed lowered rates by a quarter of a percentage point. This means consumers shouldn’t expect rates to change dramatically.

“It’s not like credit card rates are going to go from, you know, 26% down to 18 or something like that,” said Gibson. 

The Federal Reserve signaled that two additional rate cuts are likely before the end of the year. Gibson recommend consumers take advantage of the changing rate environment by reviewing their existing debt.

“Now more than ever, just be aware if you have any debt that’s outstanding. All the way from student loans to credit cards to mortgages to cars. Just be vigilant and be in communication with your lenders,” Gibson advised.

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