Federal Reserve interest rate cut is good news for local borrowers

JOHNSON CITY, Tenn, (WJHL)—Freddie Taylor and his wife say that every penny counts on their fixed income as retired military personnel. When it comes to borrowing money to buy a new car, the interest rate is a big consideration.

"The interest rates are so high now we have to watch [what] we buy all through the month to afford the basics," said Taylor at the Kia of Johnson City dealership.

Taylor told News Channel 11 that he was thrilled to hear that the Federal Reserve had reduced its benchmark rate on Wednesday, as it had been at its highest point in 23 years. The half-percentage-point cut will relieve borrowers who have credit card debt and offer lower mortgage rates and rates on auto loans.

"With the interest rates the way they are, a lower rate could make $200 a month difference with your payment, and that's a big deal for many people," explained Taylor.

Local bankers told News Channel 11 that the jumbo-sized cut is an aggressive decision, but the Federal Reserve noted that historically, the government cuts rates in quarter-percent points.

Detra Cleven with the Bank of Tennessee said while the cut will help borrowers, the lower rates may disappoint others.

"If you have money on a deposit, you might think it's a bad thing because your rates are going down," explained Cleven.

But Cleven said the rate cut is a good thing as it'll boost consumer confidence.

"If anything, it's good for everyone's mentality," commented Cleven, the executive vice president of the Bank of Tennessee. "We haven't had a rate change, a lower rate change, since pre-COVID, and that's a long time."

Simply put, the cut makes borrowing money cheaper. Some businesses say they expect to see the impact immediately. Cameron Miller, the finance manager of Kia of Johnson City, said he's already seeing customers shopping with a lower interest rate in mind.

"We have a lot more people who are ready to buy right now," Miller told News Channel 11. " Whenever you hit a slower time, it's because people are waiting for these interest rates to come down, and now all of these people that have been waiting are ready to go."

Miller said the dealership and its inventory are ready for customers.