Federal interest rate cut down half point, local experts weigh in on spending

WACO, Texas (KWTX) - On Wednesday, the Federal Reserve announced they would be reducing the federal interest rate by 0.5 points, which has not gone down since the pandemic in 2020.

When asked about why the Federal Open Market Committe would lower the rate, Texas A&M Executive Professor of Finance Jill Cetina explains that FOMC would have lowered the rate to lessen the impacts of inflation, which is slowly decreasing as well.

"I think that's what part of what made the Feds feel comfortable; this idea that when real interest rates are that high that is acting as a break on the economy, but we've got inflation down so now we need to bring real interest rates down," Cetina explained.

Cetina warns buyers to not act too quickly, as the interest rate could go back up depending on what happens to government spending and who comes into the White House during the next election.

Local Waco realtor with Weichert, Realtors the Eastland Group, Joe Reed, explains that with the federal interest rate decreasing for the first time since the pandemic, he expects to get more clients looking for homes in the market.

"With the interest rates moving, we expect there is going to be a large part of that market that is going to come in and be ready to purchase if that happens then we will have more inventory to sell and more buyers for inventory" Reed said.

Reed reminds buyers that just because the federal rate has changed, doesn't mean things will be cheaper.

"Waiting for interest rates to drop...you are going to have more competition with other buyers and that means prices are going up, so just because the interest rate came down doesn't mean the total monthly payment is going down... buy when you can afford to buy, and later when interest rates do go down, refinance," Reed advised.