Fed cuts interest rates

WASHINGTON (NEXSTAR) - The Federal Reserve cut interest rates Wednesday for the first time in four years.

Over time, rate cuts mean lower borrowing costs on mortgages, car loans and credit cards but experts say it will take a series of cuts to really see those effects.

Stocks shot up after the Federal Reserve announced a .05 interest rate cut.

Federal Reserve Chair Jerome Powell explained the move.

"The U.S. economy is in good shape. It's growing at a solid pace. Inflation is coming down. We want to keep it there. That's what we're doing," said Powell.

Inflation hit a 40-year high in June 2022.  This august it fell closer to the Fed's goal.

"Our patient approach over the past year has paid dividends. Inflation is now much closer to our objective, and we have gained greater confidence that inflation is moving sustainably toward 2%," said Powell.

The cut signals a focus on the job market, which has slowed in recent months.

Greg McBride with Bankrate says the Federal Reserve does what the economy needs.

"Now's the time to start taking the foot off the break," said McBride.

The cut is expected to be the first of a series of rate cuts over the next several months.  McBride says that will ultimately ease the burden of carrying debt.

"Credit cards, home equity lines of credit, those rates will stair step lower as the Federal Reserve cuts rates," said McBride.

The Federal Reserve's next meetings are in November and December.  Powell said they'll consider future cuts one at a time.

"We made a good strong start to this, and that's really frankly a sign of our confidence, confidence that inflation is coming down," said Powell.

Mortgage rates were already starting to come down in anticipation of this decision.  Powell says the cut will only improve the housing market.