The highest interest rates in a generation may finally ease Wednesday, as the Federal Reserve meets to consider the first rate cut in four years , potentially ushering in a new era of lower borrowing costs for anyone seeking a new home, car or credit card .
In recent comments, Fed Chair Jerome Powell signaled that “the time has come ” for an interest rate cut at the group’s September meeting, which concludes today. The looming question is, how big of a cut? Forecasts are split between a reduction of one quarter of a percent and one half to the benchmark federal funds rate, which stands at a 23-year high.
The mother of all interest rates is actually a range, and it has sat at 5.25% to 5.5% since July 2023, following a campaign of rate hikes to combat surging inflation . In response, rates on mortgages, car loans and credit cards have reached historic highs.
The two-day Fed meeting ends at 2 p.m. with a rate announcement. Powell will hold a press conference at 2:30 p.m. The financial world will be watching.