The Fed issues first interest rate cut in a decade

by Julia Guardione Updated on: August 1, 2019
On July 31st, the Federal Reserve announced that they would be cutting interest rates for the first time since the 2008 economic crisis – over a decade ago. 

The Fed’s role is to maintain stability and “alleviate crises” in our financial system. Historically, they have issued rate increases to stabilize a booming, lending-heavy, high-inflation economic climate. Inversely, the Fed has lowered rates to stimulate spending in a recessed, stagnant economy.

What is both interesting and historic about this rate decrease is that the economy currently seems to be stable; borrowing is steady, unemployment is low, and inflation is relatively steady, meaning that the Fed is lowering rates simply to prevent the economy from slowing down.

So, why lower rates at all?

According to the Washington Post, this decision is the result of other factors economists believe to have a potentially negative influence our financial climate, such as the ongoing trade tensions with China and less-than-ideal inflation rates.

2019 Auto Refinance Rates See Today's Rates

Additionally, pressure by President Trump to lower rates and The Fed’s desire to be preemptive rather than reactive to economic shifts is also said to have an heavy influence on today’s decision.

What this means for borrowers

Because lower interest rates are designed to stimulate the economy, this is good news for anyone with debt or looking to get a loan.

This is good news for anyone with debt or looking to get a loan.
The cut should make loans cheaper for people buying houses, cars, trying to start a business, and those paying off credit cards or student loans. The effect of these changes doesn’t happen overnight, so consumers probably will not wake up tomorrow to find that all of their favorite rates have changed by a quarter of a point.

This is also a great time to refinance, especially for borrowers who recently took out a loan within the last year or so, as rates are likely lower than those available at the time the loan was generated. Though it is unlikely the U.S. will see a 0% interest rate like was available in the past, this cut will still reduce pressure on car shopper finances.

Compare Auto Refinance Rates
No impact to credit score.
Shop For Rates Now
If you have investments, this cut could benefit you there, too. A surge in stock prices tend to accompany rate cuts, meaning that the value of your investments may increase.

However, with new rate cuts comes increased potential for risky lending. Though the difference in rate is only minimal, it is still important for borrowers to avoid predatory loans by making sure they can afford the payments and understand the terms.

Overall, this rate cut can be great new for many Americans who want to create some wiggle room in their budget. Pay down debt, refinance, start saving, and enjoy the break on your wallet.

About The Author


Julia Guardione

Julia Guardione is RateGenius’ auto refinance expert. She is a graduate of Texas State University and a lover of all things outdoors. She lives in Austin, Texas with her dog and cat. She’s always open to new ideas, so if you have any suggestions or questions, email her at pr@rategenius.com.


Read More

by Stephanie Colestock

What You Need To Know About the New Experian Boost

Improving your credit score usually takes years’ worth of effort. With Experian Boost, you can increase your score in seconds. By the time you reach adulthood, you already know that your credit score is very important. Even if you don’t know exactly how those three-digit numbers will…

by Stephanie Colestock

When Should I Refinance My Car Loan?

Were you happy with your car loan when you got it? Not many are, so you might consider refinancing. ● When considering a refinance, sooner is usually better than later. ● One of the best times to refinance is when interest rates are down. ● Take action…

by Chonce Maddox

Not all Credit Scores are Created Equal — Just Look at UltraFICO

Did you know you have more than one credit score? Which one is the best or the right one? Your Credit Score Matters Your credit score is one of the most important numbers influencing your financial health. For lenders, it is a major factor for determining your trustworthiness as…

review review

Customer Reviews

Read our 11289 Certified Reviews

4.9

READ OUR REVIEWS
apply now apply now

Apply Now

Lower your interest rate and drop monthly payments by an average of $76*/month!


GET STARTED