KANSAS CITY, Mo. — The Federal Reserve is expected to announce an interest rate cut Wednesday afternoon, the first since last year, amid a widening debate over whether now is the right time to ease borrowing costs.
For more than a year, the Fed kept rates high in an effort to tamp down inflation. But after continued pushback from the White House and subtle signals from Fed Chair Jerome Powell that conditions are right, the central bank is poised to deliver a modest cut - likely around a quarter of a percentage point.
That move, local economists say, would slightly lower costs for cars, homes and other loans, but the impact won’t be immediate.
“Rate changes are the lever the Fed pulls to heat up or cool the economy,” said Larry Wigger, a supply chain economist at the University of Missouri-Kansas City.
“They’re probably only going to pull the lever down a fraction of a notch.”
Some experts say it could take months for the effect of a rate cut to be felt.
“Take it all with a grain of salt,” Wigger said. “There’s no real certainty here, and a million different ways to interpret it. And that’s coming from somebody who’s studied this, who writes on it, who researches it.”
Chris Kuehl, managing director of Armada Corporate Intelligence, said the move appears intended as a preemptive step to counter signs of economic slowing, including a slight rise in unemployment and reduced job growth.
“Better to do something now than wait,” Kuehl said, predicting that another cut is possible before the end of the year.
While mortgage rates may not shift dramatically - since they follow long-term bond yields more closely than Fed policy rates - business borrowing could see faster relief.
The official decision is expected later Wednesday.
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KSHB 41 reporter Grant Stephens covers stories involving downtown Kansas City, Missouri, up to North Kansas City. Share your story idea with Grant
