Broker Check

Why Should I Care That the Fed Cut Rates 1/4 Point?

| August 02, 2019
Share |

Why Should I Care That The Fed Cut Rates ¼ Point?

The Fed cut rates ¼ point this week. That doesn’t sound like much, so why should we care? This means that the overnight loan rate that banks charge is lower. This might help to stimulate the economy, which may have showed some slowing down recently. When it costs less to borrow, companies might potentially refinance their debt and this might enable them to increase production. With that production may come an increase in oil prices because of increased demand on oil supply. That might eventually hit consumer pocketbooks as rising costs might be passed along since it may cost more to produce or transport goods and services. Since inflation has been essentially stagnant, a rate cut might also bring some inflation back into the marketplace. Changes in the Fed’s monetary policy are worth noting as they may potentially impact the financial markets. Your financial advisor may help you to decipher how your portfolio might possibly be impacted. If you are a long-term investor, it is important to keep in mind that short-term price changes in the financial markets are typically not as important as longer term trends and discussing your time horizon and risk tolerance with your financial advisor may be helpful toward easing any concerns or questions you might have.

This information is provided for general educational purposes only and is not intended to offer specific advice to any individual.

Seek professional advice before taking any action in regard to your finances.

Share |