TOLEDO, Ohio — The Federal Reserve is expected to cut interest rates Tuesday, something the economy hasn't seen since before the pandemic.
It could signal some relief for Americans struggling with inflation. Economists were predicting we'd see cuts earlier this spring, but Fed chair Jerome Powell said inflation still wasn't under control, so they kept interest rates at their current level.
If we do see the expected cuts on Tuesday, it's a sign that the Fed thinks they have finally tamped down on inflation and it can mean some exciting positives for industries like the housing market.
"For the average American, it is a good thing," Tom Beehner, a realtor with Key Realty said. "Interest rates reducing is going to make the cost of buying a mortgage more affordable and increase the amount of mortgage they can purchase."
Beehner said if you've been on the fence about buying a home because of all the associated costs, this potential cut might be what you've been waiting for.
Since 2020, the Fed has been trying to tamp down on inflation and interest rates have been hiked 11 times.
According to Money.com, a 30-year fixed mortgage now comes with roughly 6.5% interest, the highest it's been in 23 years.
"When that happened, that's when buyers stopped purchasing," Beehner said.
Beehner said many people have sat out of the market, worried they simply couldn't afford all of the associated costs.
But with the possibility of a light at the end of the tunnel, that soon could all change. But Beehner said it could be a double-edged sword, especially for Toledo, with its limited home inventory.
"There is a downside. If interest rates reduce and supply doesn't, home prices will increase and that's counterintuitive to what's going on," Beehner said.
But then again, Beehner said this might convince people who are considering selling their home that maybe it's time to buy again. Generally, he said this cut is great news for consumers.
"It's a good thing," Beehner said. "It should help buyers get out there and start looking again."
If we do see the Fed announce an interest rate cut tomorrow, how much of a cut could we see?
Normally the Fed will announce cuts by the quarter percent, but the Associated Press speculates we could see an unusually large half a percent cut.