PHILADELPHIA (KYW Newsradio) — The Federal Reserve is expected to announce an interest rate cut Thursday. It will be the second reduction of the year, and economists believe it will be smaller than half a percentage reduction we saw in September.
“Fed is in a position where they can continue to cut rates but are able to do so in a more deliberate fashion, so expect a quarter-point rate cut this week,” said Greg McBride, Bankrate.com chief financial analyst.
And it could be a while before consumers see the relief.
“Could take a month. Could take up to three months before you see that lower rate,” McBride said.
“A quarter-point cut by the Fed means your credit card, your home equity line of credit, those variable rate debts — they will similarly step down a quarter of percentage point. Probably won’t happen right away.”
McBride expects rates to continue to drop in 2025, but he says now is the time to pay off any outstanding debt.
“Don’t sit back and wait for rates to drop and make your life easier. You have to continue to stay aggressive about paying down that debt,” McBride advises. “Seek out those 0% and other low-rate balance transfer offers to really turbocharge repayment on that credit card debt.”
Despite the Fed’s half-point cut in September, mortgage rates have increased over the last month.
“Mortgage rates that had fallen down close to 6% are now back up at 7%, and they’re still climbing.”
McBride says hopeful homebuyers should use this time to find ways to boost earnings to improve their buying power.
“Continue to invest in yourself, boosting your earning power, whether it’s finishing up that degree, getting a certification that positions you for a promotion. Those are the types of things that could make homeownership much more tenable 12 or 24 months down the road.”