NASHVILLE, Tenn. (WTVF) — The Federal Reserve announced the first interest rate cut since December.
Fed leaders made the decision this week in hopes of boosting low employment, which at this point, outweighs concerns about inflation.
It's a move the President has been pushing for all year, in an effort to grow the economy.
Lipscomb economics professor Dr. Julio Rivas says the cut generally means it will be easier to buy a house, get a new car or take out a loan.
"So by lowering the rates, the hope is to stimulate the job market. Since rates go low, businesses make new investments, you hire more people. Hopefully, there will be more housing, more construction, then you hire more people — and that stimulates the economy," Dr. Rivas explained.
So what does this all mean for you?
Historically, with an interest rate cut, it's good news for your investments.
"If you're investing in the stock market, every time rates go down, the stock market tends to go up," said Rivas.
It's also favorable when it comes to loans, mortgages, and credit card interest rates.
"If you bought a house with a very high rate, you might be able to refinance in the future for a lower rate, and that might be a good thing for you to think about," Rivas said.
He added that predicting the future is difficult — lots of factors could change the trajectory of the economy. Plus, given the unstable housing market lately, nothing is certain.
There are downsides to rate cuts, too.
"If you're investing in your savings account or something like that, rates will probably go down," explained the professor.
Keep in mind: we likely won't see the economic effects of an interest rate cut like this until much later.
Experts add that there will likely be more cuts in the future. We'll keep you updated on how this impacts you and your money.
Do you have more information about this story? You can email me at nikki.hauser@newschannel5.com.
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