What a Federal Reserve rate cut means for your finances

Core Points - The Federal Reserve has cut its benchmark interest rate by a quarter point for the second time since September, following a nine-month period without cuts [1] - The federal funds rate influences borrowing costs for consumers, affecting credit cards, auto loans, and mortgages [1][3] - The Fed aims to manage inflation and encourage full employment, facing challenges with inflation above the 2% target and a weak job market [3] Impact on Savings and Loans - Falling interest rates will reduce the attractiveness of yields on savings accounts and certificates of deposit [4] - After the last rate cut in September, three of the top five high-yield savings accounts reduced their rates, with current top rates around 4.46% to 4.6% [5] - The national average for traditional savings accounts is significantly lower at 0.63% [6] - Prospective homebuyers have already factored in the recent rate cut into the housing market [7]