Rate Cut

Extracted Attributes

• Definition

  A reduction in interest rates

• Primary Implementer

  Central banks, e.g., U.S. Federal Reserve (FOMC)

• Other Influencing Actions

  Selling Treasury bonds (to increase liquidity), selling dollar reserves (to affect currency prices)

• Rates Directly Controlled

  Federal funds rate, discount rate

• Economic Impact (Positive)

  Promotes economic growth, reduces cost of borrowing for businesses and consumers, can lead to lower unemployment, allows refinancing of existing debts

• Key Influencing Indicators

  Consumer Price Index (CPI), inflation rates, labor market conditions

• Target Rate Range (Example)

  4% to 4.25% (as of a 2025 cut)

• Typical Magnitude of Reduction

  0.25 percentage points (a quarter point)

• Economic Impact (Negative/Risk)

  Possibility of earning less from investments

Timeline

• The Federal Open Market Committee (FOMC) affected the price of currencies by selling dollar reserves during the Mexican peso bailout. (Source: wikipedia)

  1994

• The Federal Reserve announced a rate cut, lowering its benchmark lending rate by a quarter point to a new range of 4% to 4.25%. This was the first rate cut in nine months and the first of President Donald Trump's second term, largely in response to a faltering labor market. (Source: web_search_results)

  2025-09-17

History of Federal Open Market Committee actions

This is a list of historical rate actions by the United States Federal Open Market Committee (FOMC). The FOMC controls the supply of credit to banks and the sale of treasury securities. The Federal Open Market Committee meets every two months during the fiscal year. At scheduled meetings, the FOMC meets and makes any changes it sees as necessary, notably to the federal funds rate and the discount rate. The committee may also take actions with a less firm target, such as an increasing liquidity by the sale of a set amount of Treasury bonds, or affecting the price of currencies both foreign and domestic by selling dollar reserves (such as during the Mexican peso bailout in 1994). Jerome Powell is the current chairperson of the Federal Reserve and the FOMC.

Web Search Results

• How Federal Reserve Interest Rate Cuts Can Impact You - Equifax

  Interest rate cuts help promote economic growth. The main way they do this is by making it easier for businesses to grow. Rate cuts reduce the cost of borrowing. This allows business owners to take out loans to buy land, equipment and raw materials. In some cases, a business owner can't afford to fill a large order. Loans can help cover the cost of producing new inventory. Rate cuts reduce the cost of this type of loan. [...] Rate cuts give you a valuable opportunity to refinance your existing debts. This can help reduce the amount of interest you pay over time. Refinancing may also help you qualify for a lower monthly payment or a shorter loan term. This can help make your debts more manageable. ## Interest Rate Cut Effects on Savings and Investments [...] Besides fighting inflation, rate cuts may lead to lower levels of unemployment. When it's less expensive for business owners to borrow money, they can afford to fund new projects. This increases the demand for labor. The major risk with rate cuts is the possibility of earning less from investments. ## Planning for the Future

• How Federal Reserve Interest Rate Cuts Affect Consumers

  A rate cut could help consumers save money by reducing interest payments on certain types of financing that are linked to prime or other rates that tend to move in tandem with the Fed's target rate. ## Mortgages A rate cut typically lowers the cost of financing a home but the extent of the benefit from lower mortgage rates depends on the type of mortgage loan. [...] A rate cut makes it cheaper to borrow money. That makes it cheaper for corporations to make investments and hire people, and makes it easier for consumers to buy a house or car. Higher rates make it harder to borrow, but they increase the interest rates on bank deposits. ## How Will I Use This in Real Life? [...] A rate cut will have no impact on the amount of the monthly payment for a fixed-rate mortgage. Low rates can be good for potential homeowners but fixed-rate mortgages don't move directly with the Fed's rate changes. A Fed rate cut changes the short-term lending rate, but most fixed-rate mortgages are unaffected.

• Fed announces first rate cut in nine months, signals more reductions ...

  Wednesday’s rate cut was the first in nine months, after the Federal Reserve dropped its benchmark lending rate by a quarter point in December. It’s also the first rate cut of President Donald Trump’s second term. Link Copied! 6:49 p.m. UTC, September 17, 2025 Trump did not get what he wanted today From CNN's Lucy Bayly Image 33: President Donald Trump speaks with reporters outside the White House on Tuesday. [...] The Federal Reserve on Wednesday lowered interest rates for the first time since December to support America’s faltering labor market. The central bank cut its benchmark lending rate by a quarter point to a new range of 4% to 4.25%. It’s the first rate cutof President Donald Trump’s second term, following a nine-month pause prompted by the uncertainty surrounding the administration’s major policy shifts. [...] After an uncomfortable nine-month pause, Federal Reserve officials on Wednesday are expected to announce they are finally lowering interest rates. But they are confronted with an all-too-familiar question: Is it already too late to step in? The long-awaited rate cut would be largely in response to mounting signs that America’s labor market is faltering — and increasingly at risk of deteriorating.

• Why the US is cutting interest rates - BBC

  The Federal Reserve is widely expected to announce it is lowering the target for its key lending rate by 0.25 percentage points. That will put it in a range of 4% to 4.25% - the lowest level since late 2022. The move - the bank's first rate cut since last December - is expected to kick off a series of additional reductions in the months ahead, which should help bring down borrowing costs across the US.

• Fed rate cut: When to refinance a mortgage, car loan ... - CNBC

  Mad Money with Jim Cramer The Federal Reserve announced a long-awaited rate cut on Wednesday. The move could bring some consumer rates down, which may be good news for borrowers hoping to refinance into lower-cost loans. [...] The Fed's long-awaited rate cut could bring some consumer rates down, which may be good news for borrowers hoping to refinance into lower-cost loans. But whether to refi existing mortgages, car loans or student debt into lower-rate alternatives generally depends on the type of loan and your financial picture, experts say. Image 10: Jim Cramer recaps Wednesday's FOMC rate cut decision watch now VIDEO 10:40 10:40 Jim Cramer recaps Wednesday's FOMC rate cut decision [...] Published Time: 2025-09-19T11:35:01+0000 Fed rate cut: When to refinance a mortgage, car loan, student loan Skip Navigation Image 1: CNBC logo Image 2: logo Markets Pre-Markets U.S. Markets Currencies Cryptocurrency Futures & Commodities Bonds Funds & ETFs Business Economy Finance Health & Science Media Real Estate Energy Climate Transportation Industrials Retail Wealth Sports Life Small Business Investing