Smart Borrower Blog

Fed Makes 3rd Rate Cut in 4 Months

Oct 30th, 2019 @ 1:01 PM by Amber Nelson

The Federal Reserve cut its target interest rate again Wednesday, the fourth decrease since July. The move was likely a hedge against mounting international financial trouble and brewing domestic slowing.

The new federal funds rate range is 1.5% to 1.75%, representing a cut of 0.25%.

Even though the U.S. economy is still in the midst of the longest running economic expansion, the Fed saw some signs of weakness both at home and abroad. U.S. GDP grew by 1.9% in the third quarter but that is significantly below the 3.1% growth from the first quarter. Business investment and optimism have been waning in recent months as well. Still, unemployment remains near record lows and the stock market is hitting record highs.

Globally, the Fed noted that muted concern about the UK’s exit from the European Union as well as the ongoing trade deal issues between the U.S. and China. “There’s plenty of risk left, but I have to say the risks seems to have subsided,” said Federal Reserve Chairman Jerome Powell said.

Powell is fairly confident this will be the last rate cut of the year. “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the state of the economy remains broadly consistent with our outlook,” Powell said, but he added that “if that changes, the Fed will respond correspondingly.”

The Fed’s post-meeting statement also left only a tiny wiggle room for rate reductions. “The committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate,” the statement said.

The federal funds rate affects everything from mortgage rates to auto loan rates to credit card rates. According to data from, within 90 days after a Fed rate cut, mortgage rates will drop by an average of 0.53% and credit card rates fall by 0.60%. Car loan rates see a lesser impact with an average decrease of just 0.35%.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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