The Fed Reserve cut its key interest rate this week as it continues driving in the dark amid the ongoing shutdown.

Wednesday’s decision brings the Fed’s key rate down to about 3.9%, from about 4.1%. The central bank had cranked its rate to roughly 5.3% in 2023 and 2024 to combat the biggest inflation spike in four decades. Lower rates could, over time, reduce borrowing costs for mortgages, auto loans, and credit cards, as well as for business loans.

When the Fed stops buying or begins selling bonds, private investors must step in, often demanding higher yields to compensate for risk. That pushes mortgage rates higher, even if the Fed is cutting short-term interest rates at the same time.

Investors are expecting the Federal Reserve to decide that it’s lowering interest rates, but potential for divisions on the committee about leaning into easier monetary policy could move markets, according to Ian Lyngen,

The rate cut could gradually reduce costs for mortgages, credit cards, auto loans, and business borrowing, offering some relief to consumers and companies.

The Federal Reserve's October interest-rate decision is nearly here. The central bank's policymaking arm, the Federal Open Market Committee, is slated to release its decision at 2:00 p.m. Eastern. Fed officials are expected to cut rates by a quarter of a percentage point.

Markets predict the Fed will cut rates again this week. Discover what a Fed move could mean for your money in 2025—and how to keep your savings earning a top return.

Treasury yields were rising after the Federal Reserve announced Wednesday that it’s cutting its benchmark rate by a quarter percentage point, but were little changed by the announcement. The yield on the 10-year Treasury note was rising about 4 basis points to around 4.

The Federal Reserve's decision on Wednesday to begin winding down its long-running balance sheet runoff has done little to ease concerns about near-term liquidity strains in the roughly $4 trillion U.