PITTSBURGH (KDKA) — After the Federal Reserve raised interest rates four times in 2018, it has now cut those rates twice in three months.
“They’re cutting interest rates basically in response to lower inflation, really almost non-existent inflation,” David Root, a certified financial planner, told KDKA money editor Jon Delano on Thursday.
Root said a cut in interest rates usually boosts the stock market.
“It tends to be stimulative for stocks and bonds,” he said. “We saw almost an immediate reaction when the Fed came out.”
That’s good news for those with IRAs, 401Ks, and other stock market investments.
The Dow Jones Industrial, which first broke 27,000 points in July, is now back above that mark.
But, in general, Root says, “The interest rate cut itself really doesn’t impact us as consumers. It’s more for corporations to help them relieve borrowing costs in the short run.”
Root says this rate cut will have a negligible impact on student loan and auto interest rates unless more cuts come, something President Trump wants.
“He would rather see the Fed be bold, and lower rates by 50 basis points at a time so that we stay in balance with these other countries have very low-interest rates.”
Still, for homeowners, lower rates may mean it’s time to refinance a home mortgage.
Root: It’s worth considering, and the direction very definitely is for even lower rates so…
Delano: You might wait?
Root: I think it’s worth waiting, but kind of have your finger on the trigger because Ii think it’s going to be a choice opportunity to look at that.