Name: What does the Feds rate cut mean for consumers?
Uploaded: 2025-12-11T00:23:10.991Z
Duration: 3 min 39 s
Description: The Federal Reserve on Wednesday cut interest rates by a quarter of a percentage point, the third rate cut this year. CBS News business analyst Jill Schlesinger has more.

The Federal Reserve on Wednesday cut interest rates by a quarter of a percentage point, the third rate cut this year. CBS News business analyst Jill Schlesinger has more.

Washington

The Federal Reserve has reduced interest rates by a quarter of a percentage point, its third cut this year, bringing the federal funds rate to its lowest level since November 2022. While the rate cut is intended to support economic growth, the impact on consumers—particularly those with high credit card balances—will be modest, with only slight reductions in borrowing costs.

Chairman Jerome Powell stated that the Fed is now in a 'wait-and-see' mode regarding future rate changes, aiming to balance job growth and inflation. Mortgage rates have also drifted lower, but remain higher than during the pandemic, when rates were unusually low due to economic shutdowns.

What does the Fed's rate cut mean for consumers?

We have some important news for borrowers. The Federal Reserve has lowered interest rates for the third time this year. The Fed has cut interest rates by a quarter of a percentage point. That puts the federal funds rate, which affects mortgages and credit card loans, at its lowest level since November of 2022. The Fed meets again for another possible rate cut in January, but Chairman Jerome Powell today said the board is in a wait-and-see mode. We've been sort of moving in the direction of neutral. Now we're in the range of neutral. We're in the high end of the range of neutral, I would say, and that's what we're doing now. We haven't made any decision about January, but as I've said, we think we're well-positioned to wait and see how the economy performs. President Trump has openly criticized Powell for months. At the White House earlier today, he said the Federal Reserve should have gone a step further. Interest rates are going down, except with him, not too much. He did a rather, I would say a rather small number that could have been doubled, at least doubled. And he was interviewing candidates for that top job today. Let's bring in CBS News business analyst, Jill Schlesinger. Jill, good to see you. We miss you in Studio 57, but good to see you nonetheless via Zoom. So let's consider this rate cut and the last two rate cuts. What does this mean for people? You know, if you're a borrower, you'll see slightly lower interest rates, but listen, gang, I understand it really doesn't feel like a lot if you're paying 21% or 22% for a credit card balance and all of a sudden you have a slightly lower rate, maybe it's 20 and a half. So it's tough to really see a lot of progress when rates are that high. And you know, we'll see small help with an auto loan or a personal loan. And you mentioned mortgage rates. Now that's a little bit different. Although the Fed doesn't directly impact the home loan market, it sort of indirectly does. And we have seen mortgage rates drift lower to around 6.2%. I think that for borrowers though, they still feel that pang of, gosh, I wish I could get back to where we were during the pandemic. Interest rates were so much lower, but to put that in perspective, we had an economy that was frozen solid. That's why interest rates were so low. As you heard Chairman Powell say, these are more normal interest rates for an economy that continues to grow. Can you help me understand what Powell means by we're in the high end of the range of neutral? I was so sad that someone picked that soundbite because it sounds like wah, wah, wah. And I understand that. Okay, so what he's really trying to say is the Fed is trying to figure out what is the right level of interest rates so that the economy can be in balance. And what is that balance? It's a balance between growing enough to create jobs for anyone who wants one, but not growing by so much that you create inflation, this neutral pace. Now, by the way, this is not prescriptive. It's sort of by feel and touch. And so what he's trying to say is we're doing our best. We don't know what that is. We think we're kind of close there. We think we're in balance, but we will not understand whether we're right or wrong until more economic data start to pour in. Remember, the Fed didn't get any economic data when we didn't get any economic data. That was when the government was shut down. Jill Schlesinger, thanks for the long day. I know you were on mornings. Appreciate you. Sure, thank you.

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