On Wednesday, Federal Reserve officials announced the early stages of unwinding the central bank’s war on inflation, a declaration that quickly and broadly impacted both financial markets and household budgets alike.
The Impact of the Fed’s Rate Cut on Stocks
The Fed’s announcement was music to the ears of stock traders, who pushed the Dow Jones Industrial Average to a record level on Wednesday, while the S&P 500 and Nasdaq Composite indices rose by 1.4%. Stocks continued to win on Thursday, bolstered by a strong retail sales report.
The Impact of the Fed’s Rate Cut on Mortgage Loans
Mortgage loans have become slightly more available as one of the specific ways lending has become cheaper. This week, the average interest rate for a 30-year mortgage fell below 7% for the first time since August, according to Freddie Mac on Thursday. Analysts expect mortgage rates to continue to decline from their peak of nearly 8% in late October into next year.
The Impact of the Fed’s Rate Cut on Fixed Deposits
Low interest rates are not entirely good news for your budget, as the opportunity to earn the highest interest rates in decades on certificates of deposit and high-yield savings accounts and safe investments fades. A few weeks ago, savers could obtain yields of 6% on a certificate of deposit, but as of Wednesday, the best available offers have dropped to 5.76%, according to data on CD rates tracked by Investopedia.
Source: https://www.investopedia.com/what-the-fed-easing-its-war-on-inflation-means-for-your-money-8416333
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