ANALYSIS
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Fed Cut Won't Translate Into Much for Consumers ... Yet
Its plans to buy more debt may unfreeze market in '09, but consumer rates stuck for now
By Jim O'Neill
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Posted Dec 17, 08 9:53 AM CST
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(Newser)
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Consumers hoping for lower interest rates on credit cards, car loans, and mortgages after the Federal Reserve dropped a key interest rate to near 0% yesterday aren’t likely to get a break soon, reports MarketWatch. But loans could be easier to get once the Fed’s other actions—buying up a range of debt—take hold in the first quarter of 2009.
Experts say mortgage credit has to improve for the economy to rebound, and that’ll be a priority next year. But the struggling banking industry isn’t likely to pass along the Fed’s rate cut to consumers immediately. Home-equity rates might drop slightly, as may student-loan rates. But, one professor notes, “credit-card companies are not noted for cutting their rates when the federal funds rate falls.”