Fed Watch Live Blog: Breaking Down November's Rate Cut Decision

Today's move by the Fed won't impact long-term borrowing rates, said Jason Walter, CNET Money expert. That goes for mortgages, too. The average 30-year fixed mortgage rate is 6.89%. 

Mortgage rates temporarily fell after September's jumbo rate cut, but strong economic news and uncertainty over the election caused them to surge again.

If you're planning to buy a home by the end of the year, other home-buying costs could still work in your favor. Competition among buyers is usually lower in the winter months. That could make it a good time to negotiate a deal, according to Walter. 

"You could ask for a closing cost credit to decrease your out-of-pocket costs in purchasing a home, ask the seller for a credit to buy down your mortgage rates or offer less than the asking price," he said. 

Mortgage rates will continue to be volatile, but experts say if the Fed continues cutting rates, we could finally start to see some relief down the road. For now, there are steps you can take to make your monthly payment more affordable, including saving more for a down payment and getting a preapproved mortgage so you can act quickly. If you find your forever home, know you can also potentially refinance when rates do drop. 

Read more: Compare 30-Year Mortgage Rates for October 2024

Despite the Fed's rate cut, there won't be much relief for existing credit card debt, even if your variable credit card APR drops slightly. However, it's a good time to make a debt payoff plan you can stick to, said Gerri Detweiler, a credit card and CNET Money expert. 

Detweiler recommends starting by understanding how much you owe, your current interest rate and what your monthly payment should be to pay your balance in full within three years. All this information can be found on your monthly credit card statement. 

Detweiler says confronting debt is stressful, and it's OK to seek help. "You may need someone compassionate and nonjudgmental to help you gather this information." 

As the Fed lowers rates, Detweiler predicts, there may be more balance transfer card offers to pay off debt faster at lower interest rates (you'll still have to pay the balance transfer fee). Some issuers offer a 0% introductory rate for a certain period of time, usually between three and 18 months, to give you some breathing room. Just keep in mind, however, that when the introductory period ends, you'll be on the hook to pay interest on the remaining balance. 

Read more: I Paid Off Over $26,000 in Credit Card Debt With a Balance Transfer Card. Here's What I Learned

The Fed's second rate cut this year means the interest rate on your credit cards may be slightly lower in an upcoming billing cycle. However, today's 0.25% reduction won't make a massive difference. 

Rather than waiting for more interest rate cuts, try to pay at least the minimum on your cards, or consider transferring your debt to a credit card with a low introductory APR. You can also try the debt avalanche or debt snowball payoff method, or consolidate your debt with a personal loan, which could have a lower interest rate.

Read more: The Fed Cut Interest Rates Again. What it Means for Your Credit Cards

Fed Chair Jerome Powell was feeling feisty at his first postelection press conference.

President-elect Donald Trump and the Republican party claimed a decisive victory earlier this week after promising sweeping changes to the economy. 

After his opening remarks announcing the Federal Open Market Committee's decision to cut interest rates a quarter-percent, Powell fielded multiple questions about how the election might affect the Fed's monetary policy. 

Powell, who has long touted the central bank's independence, was having none of it.

"In the near term, the election will have no effects on our policy decisions," he said. "We don't guess, we don't speculate and we don't assume."

When the Federal Reserve lowered interest rates in September, many expected mortgage rates to fall. But that didn't happen. 

Not long after the Fed lowered interest rates, a strong labor report and political uncertainty put mortgage rates back on the incline. While the Fed's actions influence mortgage rates, other factors, like economic data and investor expectations, are just as important. 

It's unlikely that today's 0.25% rate reduction will meaningfully affect mortgage rates, at least in the short term. 

Financial markets largely anticipated today's cut and bond markets already had it "priced in," said Odeta Kushi, deputy chief economist at First American Financial Corporation.  

Despite the recent uptick in mortgage rates, though, experts note that rates are still about 1% lower than their 2023 peak of above 8%. It's a reminder that mortgage rates can increase for a few weeks at a time, even amid a longer-term downward trend.

Earlier this year, you could find high-yield savings rates of over 5% at select banks. Since then, very few banks have held rates this high. Based on CNET's tracking, the average is 4.54%. Banks typically move in the same direction as the Fed, so if the central bank continues to lower rates, you may see your savings rate fall even more.

Is now the time to move your funds to a different bank? Experts don't think so. 

That's because most banks are expected to lower savings rates, and there might not be too much difference from one to another, according to Daniella Flores, a CNET Money expert who keeps money in a high-yield savings account. "I am not changing where my emergency fund is," Flores said.  

While some banks may keep savings rates high to stay competitive, if you're happy with your current account and the rate of return is not significantly lower than others, it's not worth making a switch. 

However, if you're looking for a guaranteed, fixed return for a set period of time, Flores recommends a certificate of deposit. A CD is a long-term, low-risk savings option that usually offers higher interest rates than the average savings account. If you won't need your money for one to two years, lock it away in a CD instead. Just know you'll pay a withdrawal penalty if you need the funds before the maturity date. 

Read more: Get Ready for Lower Savings Rates. Here's What Experts Say You Should Do Now

While the Federal Reserve doesn't control mortgage rates, it does influence the direction of borrowing costs across the economy.

Today's decision by the Federal Open Market Committee to cut interest rates by 0.25% won't result in an equal or immediate reduction in mortgage rates. But it does indicate a longer-term outlook for lower mortgage rates. 

Depending on inflation and the labor market, the central bank could potentially make another 0.25% rate cut this year during its December policy meeting, with more reductions to come in 2025.

Mortgage rates will continue to fluctuate based on economic policy and data, but home loan rates could slowly inch lower in 2025. 

Read more: How the Federal Reserve Affects Mortgage Rates

The Federal Reserve didn't serve up any surprises at today's meeting, voting to cut the federal funds rate a quarter-percent. 

After September's meeting, when the Fed bucked some expert expectations by cutting interest rates a half-percent, there was initial speculation that more jumbo cuts could come. However, mixed economic news since the last meeting put the Fed on the path toward a slow but steady reduction in interest rates.

That course could change after Donald Trump and the Republican Party's sweeping election victory earlier this week. A new administration's policies can reshape the economy, and the Fed may need to adjust accordingly. President-elect Trump's vow to raise tariffs and cut taxes could retrigger inflation, according to some experts.

The central bank began raising interest rates over two years ago to rein in soaring inflation. It left rates at a historically high level for a year, but with inflation nearing the Fed's target range of 2%, it made its first rate cut two months ago. For now, the Fed has shifted its focus to bolster a softening job market. Although unemployment is still relatively low, the Fed indicated it's trying to prevent any further cooling in the economy by lowering interest rates. For now.

Read more: Fed Cuts Rates As Expected, but the Election May Change the Fed's Course Next Year

Leaning on buy, now, pay later plans and credit cards make it too easy to blow your budget during the holiday season. That kind of spending comes at a cost: interest charges that can add up. 

The Federal Reserve's expected interest rate cut won't significantly lower shorter-term borrowing rates or make it immediately cheaper to use credit. In any case, it's never a good idea to take on debt for holiday shopping. 

"Many people make purchases based on emotions rather than considering how borrowing will impact them in the future," said Jasmine Johnson, an accountant and accredited financial counselor at Square 1 Accounting. "Holiday loan marketing ramps up this time of year to play on those emotions."

Johnson suggests setting a budget so you can spend within your means. If you plan to use a credit card this season to earn rewards, only spend what you know you can pay off right away. Otherwise, steer clear to avoid accruing interest on your balance.

The stock market's major indexes are all up again today, although not by nearly as much as yesterday's post-Election Day rally. The S&P 500 was up slightly before today's Federal Reserve meeting, as was the Nasdaq. The Dow Jones Industrial Average held steady. All three broke record highs yesterday in the wake of Donald Trump's sweeping election win.

Investors are already anticipating today's 25 basis-point cut, but the Fed's announcement at 2 p.m. ET (11 a.m. PT) could give an additional boost to markets eager for lower interest rates.

Like most experts, economist Robert Fry predicts the Fed will cut interest rates by 25 basis points today. He also expects the Fed to make a similar rate cut in December, but Fry says the central bank will likely reduce the frequency of cuts next year.

Fry predicts the Fed will cut rates every other meeting in 2025, starting with the second meeting in March. No cuts are set in stone, though, and could change as the Fed responds to what direction the economy takes in the new year. "If inflation goes back up, they can push the 2025 cuts further into the future," Fry says. 

Interest is the amount you're charged to take out a loan or use credit. It's the price you pay to borrow money. Interest rates also refer to the percentage a financial institution pays you, i.e., what you earn, for investing your money. 

So what helps determine interest rates? That's where the Federal Reserve comes into play. 

The Fed is the country's central bank that assesses the economy's health and adjusts the federal funds rate, the benchmark rate used by US banks to lend or borrow money to each other overnight. 

Although the Fed doesn't directly set interest rates for home loans or credit cards, its decisions have ripple effects on us as consumers. Just consider the way more expensive borrowing rates affect your credit card debt and whether or not you can afford a mortgage on a house. 

When the Fed lowers rates, as it did in September and will likely do today, banks typically respond by knocking down the rates they offer to savers. This will also bring some relief to short-term borrowing costs. Though you won't immediately feel the effects on your wallet, the Fed's policies will impact your money over the long term. 

Read more: How Another Fed Rate Cut Could Help (or Hurt) Your Finances

Though mortgage rates are high right now, they're expected to come down slowly over the next year. As that happens, we'll see more homebuyers jump off the sidelines to take advantage of lower rates. Increased demand could result in higher asking prices or even bidding wars, like we saw during the pandemic homebuying boom. 

That creates a unique opportunity for prospective buyers right now. 

"Rates are higher, but you have leverage as a buyer right now, because there's less competition in the market," said Jeb Smith, a CNET Money expert and realtor with over 20 years of experience. You'll likely find sellers who are more willing to negotiate on asking prices or other concessions, especially if they need to sell within a certain time frame. 

Yes, you'd be taking on a higher mortgage rate. But it doesn't have to be permanent. As rates fall, you'll have the opportunity to refinance to a lower rate, Smith said. 

Read more: Don't Let the Fed Dictate Your Homebuying Plans. Buy a House When You're Ready

If you're a homeowner, you may be tempted to shop around for a lower mortgage rate, but it's not quite time yet, according to Melissa Cohn, regional vice president at William Raveis Mortgage and CNET Money expert.

Banks and lenders usually move in the same direction as the central bank, so as the federal funds rate dips, mortgage rates often drop, too. But just because the Fed is lowering rates doesn't mean it's time to refinance your home. In fact, mortgage rates have risen significantly over the past six weeks and are closing in on 7%, despite the Fed's September rate reduction. 

Since the majority of homeowners currently have mortgage rates of 5% or lower, refinancing right now isn't financially advantageous. However, if you bought a home recently and locked in a mortgage rate over 8%, you may benefit from refinancing to a lower rate, saving you on interest. 

Cohn says it could make sense to shop for a new mortgage rate when rates drop to 6% or lower. If you plan to live in your home for at least another three years, Cohn recommends refinancing when you can find a rate at least 0.75% lower than your current rate. 

Read more: Don't Hold Your Breath for Another Refinancing Boom This Year… or Next

Many expected that the start of Fed rate cuts would automatically trigger a reduction in mortgage rates. But that hasn't happened. Mortgage rates have increased in recent weeks and are roughly 0.5% higher than they were before the Fed cut the federal funds rate by 0.5% on Sept. 18. 

Today, the average rate for a 30-year fixed mortgage is 6.89%, according to the data we collect from Bankrate. 

Rates have gone up due to stronger-than-expected economic data and shifting expectations around the timeline for Fed rate cuts this year and next. While the Fed can influence the direction of mortgage rates, it doesn't set them. Plus, volatility in the mortgage market is normal.

Though the central bank is expected to cut rates by 0.25% today, it won't make a huge difference for mortgages, said Jeb Smith, a CNET Money expert and realtor. What matters more is what we hear from Fed Chair Jerome Powell in his postmeeting press conference. If Powell speaks favorably about the trajectory of rate cuts, that could push mortgage rates down a bit, said Smith.

Incoming economic data is also crucial. If inflation or the labor markets heats up again, additional rate cuts could be postponed and mortgage rates could increase. 

Read more: Today's Mortgage Rates for Nov. 7, 2024

Experts believe the Fed will cut interest rates today. However, according to Daniella Flores, a CNET Money expert and founder of the personal finance blog I Like to Dabble, a rate cut may not mean lower prices.

Though interest rate reductions don't always drive up inflation, increased consumer demand for certain products could result in higher price tags. 

For example, if lower borrowing rates become available for mortgages and car loans, that could spike demand in those markets and ignite fresh price increases, Flores explains. In 2020 and 2021, rock-bottom mortgage rates went alongside skyrocketing home prices. 

"If people have more access to credit and start buying more, it could increase demand for consumer goods, putting upward pressure on prices," Flores said. 

The Federal Reserve is widely expected to cut the federal funds rate by a quarter-percentage point at today's policy meeting. The bigger question is what Fed Chair Jerome Powell will say at this afternoon's press conference.  

After delivering prepared remarks about the central bank's decision, Powell typically answers questions and drops hints about the Fed's next move based on inflation data and the job market. Given the Republican Party's sweeping election win this week, it may be tough for Powell to avoid addressing how a new administration might affect monetary policy going forward. 

After September's meeting, the Federal Open Market Committee penciled in two more 25-basis-point cuts in 2024 and multiple cuts in 2025. However, that could change based on how investors and the economy respond to a Congressional and White House shake-up. 

What would interest rate cuts potentially mean for you?

Lower interest rates make it cheaper to borrow money. Although one cut won't make a huge impact, a series of multiple cuts can help reduce what you would pay for a mortgage or auto loan. Interest rate cuts can also lead to reduced credit card APRs, making it less burdensome to pay down credit card debt.

But on the flip side, lower interest rates also mean you'll earn less interest on CDs and high-yield savings accounts. To help your savings grow, it's best to lock in stronger yields before the Fed cuts rates again.

We'll keep you updated on the latest news throughout the day, including the Fed's announcement at 2 p.m. ET and Powell's press conference at 2:30 p.m. ET. (Want to tune in? Here's how to watch.)