For the first time in four years, the Federal Reserve is poised to announce today that it will cut interest rates.
In March 2022, the Fed took measures to slow inflation, but these resulted in higher interest rates, which took a toll on borrowers.
The rate cut is expected to provide some relief, but it won’t necessarily be a fix-all.
For starters, the actual cut by the Fed is still an unknown; the current rate runs between 5.5 and 5.25 percent. Some analysts are predicting an initial cut of half a percentage point, with further cuts pushing the rate down to 3 percent by next summer.
Economists at Goldman Sachs have said that since U.S. economic growth is looking OK—holding at about 2.5 percent in the third quarter—the Fed may be conservative in slashing rates.
“Interest rates took the elevator going up, but they’ll be taking the stairs coming down,” Greg McBride, the chief financial analyst at Bankrate said.
McBride also said for households already struggling with high-finance payments, a series of interest rate cuts over time will have a larger impact.
So I can buy that 9-bedroom chatlet?
The Fed doesn’t determine mortgage rates directly, but its policy choices affect how lenders treat prospective buyers. Freddie Mac’s Primary Mortgage Market Survey says the 30-year fixed-rate mortgage rate for the week ending in Sept. 12 was down to 6.2 percent, the lowest it’s been in 18 months. That drop in interest rates spurred a 4.4 percent increase in new mortgage applications in August compared to last year according to the Mortgage Bankers Association. “Homebuyers, including a growing share of first-time buyers, continue to favor newly built homes,” said Joel Kan, the vice president and deputy chief economist of that organization. Further growth will depend on the Fed’s rate cuts, the great unknown.
“We’re not going back to the sub-3 percent mortgage rates of 2020 and 2021,” Greg McBride said.
As the cost of living has increased, so has American credit card debt. The number stands at $1.14 trillion, an all-time high spurred on by interest rates regularly above 20 percent. Auto debt is also around $1.63 trillion.
Fed cuts may provide a bit of relief by the end of the year … but only a bit. Credit card and auto rates may slacken a bit, but “relief is not right around the corner,” said Jonathan Smoke, the chief economist at Cox Automotive.
“It is doubtful that auto rates will rapidly decline as soon as the Fed starts cutting. With auto loan performance shaky, auto loan rates are bound to be sticky on the way down.”
Bank/Stock Impacts
The Fed changes may show up in your bank interest rates. Annual percentage yield (APY) rates may be as high as 5 percent with some online accounts, and low as .01 percent with bigger banks like Wells Fargo or Bank of America. These rates are likely to shift if the Fed cuts interest rates.
“Savings account rates may decrease as typically banks adjust their interest rates alongside the Fed,” Gates Little, the president and CEO of The Southern Bank, told The Epoch Times.
The rate cuts may affect stock prices too, but it’s hard to predict how. Morningstar research showed that cuts in 1995 and 2019 boosted equities, but had the opposite effect in 2001 and 2007. Investors need to monitor market factors as the economic cycle runs its course Jon DuPrau, managing partner at Quantum Portfolio Management, told The Epoch Times.
—Andrew Moran and Stacy Robinson
PAGER EXPLOSIONS ROCK LEBANON
Thousands of people across Lebanon were injured on Sept. 17 as their handheld electronic pagers suddenly and mysteriously exploded.
Lebanon’s state-run National News Agency reported about 2,800 people were wounded in the wave of small blasts. Another eight people were reported killed, including a child.
Lebanon’s Health Ministry called on hospitals throughout the country to prepare for a rush of new emergency room patients on Sept. 17. The Lebanese health ministry also advised pager users to distance themselves from the electronic devices, for their own safety.
State media reports indicated many members of Hezbollah—a Shia Islamist Lebanese faction that the U.S. and Israeli governments have deemed a terrorist organization—were among those terrorized by their pagers. The Epoch Times couldn’t immediately confirm who was targeted in the blasts.
Among those reported killed in the pager explosions was Mahdi Ammar, the son of a Hezbollah-aligned member of Lebanon’s Parliament named Ali Ammar. Lebanese Prime Minister Najib Mikati shared condolences for the death of the Hezbollah MP’s son, and to others wounded and killed in the episode.
Iranian Ambassador Mojtaba Amani was also reportedly injured in a blast while traveling in Beirut on Tuesday. Hezbollah has historically aligned with Iran’s regional objectives and allied against Israel.
No group or actors have claimed responsibility for the rash of pager explosions across Lebanon. Nevertheless, Lebanese officials pointed the blame at Israel.
The Lebanese prime minister and his cabinet cast the explosions as an act of Israeli aggression and a serious violation of Lebanon’s sovereignty. Hezbollah’s media relations arm said it also holds Israel responsible for the explosions.
The Israeli government has offered no public comment on the thousands of small explosions across Lebanon.
U.S. State Department spokesman Matthew Miller was more direct in denying any U.S. foreknowledge or involvement in the blasts.
Regardless of who is responsible, the explosions could escalate already high tensions between Israel and Lebanon. Hezbollah began striking at northern Israel shortly after Hamas attacked southern Israel on Oct. 7, and Hezbollah and Israeli forces have continued to trade blows in the months since.
Miller reiterated U.S. calls for “a diplomatic resolution to the conflict between Israel and Hezbollah” and expressed hopes the tens of thousands of people driven from their homes in northern Israel and southern Lebanon will be able to safely return.
The Associated Press contributed to this report.
—Ryan Morgan
BOOKMARKS
Floods in Burma (also known as Myanmar), fueled by heavy rains resulting from Typhoon Yagi, have claimed the lives of 226 locals over the past week. The floods have exacerbated an already-existing humanitarian crisis caused by a 2021 military coup. Ohio’s attorney general Dave Yost is asking for extra resources to deal with the recent addition of 20,000 Haitian immigrants into one of that state’s cities. Yost said the residents of Springfield, Ohio, had “tried to be supportive of folks that are clearly fleeing a terrible situation in Haiti, but they feel like they’re being left to handle it on their own.” A U.S. Court of Appeals in Philadelphia will issue a ruling to decide how much right the public has to know about non-citizen voting in that state. A study conducted by former Secretary of State Robert Torres revealed that around 100,000 registered voters “may potentially be non-citizens or may have been non-citizens at some point in time.” Independent presidential candidate Cornel West will not appear on the Pennsylvania ballot this November, following a ruling by that state’s Supreme Court. West was removed from the ballot after it was alleged that the 19 citizens who would serve as his potential electors neglected to include the required affidavits with their paperwork. The State Department has approved the sale of $228 million in military equipment to Taiwan; the transfer could take place as early as next month. The Taiwanese Ministry of National Defense expressed gratitude for the sale, calling U.S. assistance “the basis for maintaining regional stability” amid increased Chinese aggression in the region. —Stacy Robinson
