JACKSONVILLE, Fla. — Action News Jax Consumer Adviser Clark Howard says he is shocked the Federal Reserve cut its benchmark interest rate by half a percentage point on Wednesday from its 23-year high of 5.25% down to 4.75%.
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While the move signals the end of the Fed’s fight with inflation after two years of high rates that made borrowing money expensive for millions of Americans, Clark says it could be a bad sign for the job market.
“Half a point versus a quarter point, they are more worried about the job market than they were weeks ago and are trying to get ahead of it,” Howard told Action News Jax Ben Becker/
The much-anticipated move comes after inflation dropped from 9.1% in 2022 to just 2.5%.
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Unemployment is on the rise and higher mortgage rates are pushing up home prices. This is preventing people from buying homes.
The Fed’s decision will bring down borrowing rates, but it may take some time for borrowers to feel the effect The initial impact is expected to be small for loans like used cars, which are currently over 11%.
Credit card rates are now close to a record high.
The Fed said it envisions additional cuts this year and over the next two years, but Howard says that’s not a guarantee.
“We will get more unless we get monthly inflation reports and they say, ‘Wow. We are done with this for now,’” Howard said.
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