Fed Rate Cuts: Slow Impact, High Hurdles
Update: 2025-12-05
Description
Federal Reserve officials are expected to cut interest rates, but the positive effects on the economy may take longer than usual due to various factors. Typically, it takes up to eighteen months for Fed policy changes to fully affect consumers and businesses, but this timeline might not hold true in the current economic climate. Meanwhile, financial markets usually react quickly to Fed adjustments, but these moves are often anticipated well in advance. Rates on auto loans, mortgages, student loans, and credit cards have risen when the Fed began increasing rates in 2022, but they havent dropped as much on the way down, making it harder for many Americans to afford cars and homes. The Fed is trying to balance supporting the job market and controlling inflation, with policymakers deeply divided on the issue. These divisions could become more pronounced as a successor to Chair Jerome Powell is expected to be announced.
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