Update September 19, 2024 -- The stock market closed at all time highs across the board today, in response to yesterday's interest rate cuts by the Federal Reserve. The Dow Jones Industrial Average jumped over 500 points today, closing above 42,000 points for the first time in American history. The S&P 500 also closed at a record high, closing at 5713.64, the most ever.

By Miriam Raftery

September 18, 2024 (Washington D.C.)  -- In good news for homebuyers and other borrowers, the Federal Reserve today lowered interest rates by a full half percentage point.  It’s the first interest rate reduction since 2020 and more than the quarter point reduction that most market analysts had predicted. That brings rates down to between 4.75% and 5.25%, Forbes reports.

Moreover, Fed staff forecasts another cut in November or December, and potentially more cuts in 2025.

Fed Chairman Jerome Powell said of the economy,  “You see growth at a solid rate. You see inflation coming down. You see a labor market that’s still at very solid levels,” adding that he does not anticipate any recessionary effects from the lower Fed rates.

The Fed controls the federal funds rates (interest charged on cash reserve transactions between banks). But the central bank’s rate decisions typically spur lenders to lower rates, which could impact everything from car loans to credit card rates and student loan interest.