The Federal Reserve, which last cut interest rates in December 2024, lowered interest rates by 0.25 percent on Wednesday.
Officials of the central bank of the United States implied that there would be two more cuts to follow later this year. The committee meets in two months, on October 28 and 29. “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook,” the committee wrote in a press release.
EY-Parthenon (Ernst & Young) Chief Economist Gregory Daco told Entrepreneur Magazine in a statement that, although inflation is picking back up, “economic activity and employment are simultaneously slowing,” causing the balance to tilt toward more rate cuts. He also predicted that there would be two more rate cuts to follow this year.
“The economy’s prospects are tethered to the fortunes and spending of the well-to-do,” Mark Zandi, chief economist at Moody’s Analytics, told CNN. “Those in the top 20 percent of the income distribution are driving the economic train.”
And that gap is widening to a historic extent, Moody’s Analytics data shows. As of June 30, the top 20 percent of earners (those who make about $264,500 a year) accounted for more than 63 percent of all spending, and the top 10 percent (those who earn more than $353,000 a year) accounted for more than 49 percent—both the highest on record, according to data that goes back to 1989. In 2019, during the comparable period, those shares were 59.2 and 44.6 percent, respectively.
“If [the top-earners] turn more cautious in their spending, for whatever reason, the economy will suffer a recession,” Zandi said. That could happen if there were a significant correction in stock prices, he said, since much of the wealth that fuels spending by those “well-to-do” individuals is tied to the robust financial markets.
Here’s how the interest rate cut could impact your wallet.
Credit card interest rates tend to move in line with the federal funds rate, according to Bankrate.
Other market conditions, like inflation and the demand and supply of credit, affect the basis for most credit card interest rates. That’s why interest rates for credit cards as a whole have been increasing, from 15 percent in 2021 to more than 21 percent in 2025, despite rate cuts last year.
Credit card companies are charging higher interest rates than they did four years ago, according to Bankrate.
