Interest rates in the U.S. were cut again today, with the Federal Reserve lowering its main policy rate. This move continues the recent trend of gradual reductions in borrowing costs.
Fed’s move today
The Federal Reserve approved a quarter‑percentage‑point cut to its benchmark federal funds rate at its December meeting, effective today. This brings the target range down to about 3.5% to 3.75%, marking the third consecutive rate cut in recent months.
Other key Fed rates
Alongside the main policy rate change, the rate paid on reserve balances was reduced to about 3.65%, and the Fed’s primary credit (discount) rate was cut by a quarter point to about 3.75%, also effective today. These shifts are part of the broader easing stance aimed at supporting credit conditions.
Why the Fed is cutting
Fed officials point to a softer labor market and ongoing, though moderating, inflation as reasons for easing policy. The committee is divided, with some members favoring larger cuts or a pause, reflecting uncertainty about how fast to lower rates from here.
What it means for you
Over time, lower Fed rates tend to put downward pressure on variable borrowing costs like credit cards and some adjustable‑rate mortgages, while also trimming yields on savings accounts. The changes are not instant, but today’s decision nudges overall borrowing costs a bit lower than they were yesterday.
