Federal Reserve reduces interest rate by a quarter point

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00:00The Federal Reserve cut interest rates by a quarter percent, bringing the target rate

00:03to between four and four and a quarter percent.

00:06Here's what this means for the economy and consumer borrowing.

00:11There were a number of factors that played into this decision, including slow job growth,

00:16an increase in unemployment, and inflation the committee described as elevated.

00:20While the unemployment rate remains low, it has edged up.

00:24Job gains have slowed and downside risks to employment have risen.

00:28At the same time, inflation has risen recently and remains somewhat elevated.

00:32Powell explained how the labor market played a big factor in this decision.

00:36The recent pace of job creation appears to be below the break-even point needed to hold

00:42unemployment steady.

00:43According to the St. Louis Federal Reserve Bank, the current break-even job creation rate is

00:48between 32,000 to 82,000 jobs per month.

00:52The economy only added 22,000 jobs in August.

00:55So what does this all mean for mortgage and loan rates?

00:59Well, this doesn't automatically reduce the cost of borrowing for consumers, but it does

01:04reduce the cost of borrowing for banks, and they typically pass those savings on to their

01:09customers.

01:10I'm Ray Bogan for Straight Arrow News.

01:12For more unbiased reporting, download the SAN app.

01:16For more unbiased reporting, download the loan rates, and the current and loan rates are