To nobody’s surprise, the Fed announced a .25% interest rate cut this afternoon at the conclusion of their July meetings. This cut marks the first time the Fed has opted to cut rates since 2008…and we all remember what happened then. This cut is indicative of the Feds apprehension of an economic slowdown, which experts have been expecting for quite some time.
According to CNBC, policymakers noted that business investment has been light even though household spending has been up since earlier in the year.
Unlike 2008, when the cut came during the worst financial disaster the U.S. has experience since the Great Depression, this cut comes ahead of any slowdown or recession with the idea that it may be able to mitigate any potential slowdown. We’ll have to wait and see how this all plays out.
If you would like to learn more about interest rates, please check out our free Interest Rates and the Economy Guide.