In laymans terms, what does the Fed's cutting the rates really mean to us general middle class people?

Question

In laymans terms, what does the Fed's cutting the rates really mean to us general middle class people?

Answer 1

It pretty much means everyone is getting screwed again because they only cut rates for money lent to banks which translates into cuts on things like savings accounts.  It would really help a lot more folks if they cut interest on loans to individuals and on credit cards.  Lot of luck on that happening.

Answer 2

The "fed" cutting interest rates doesn't necessarily mean that us in the real world will see a difference. The "fed" cuts the rates at which the large financial institutions borrow money from the gov't. It's up to the individual institutions on whether they pass the savings onto the customer. MOST of the time, it means that the mortgage rates will drop slightly, but not by nearly as much as the "fed" has cut their rate.It will almost NEVER have any affect on credit cards.

The other thing that it means to us our here in the real world is that C.D. and savings account rates drop and you earn less money on your bank investments. I went into my local bank today and the C.D. rates have dropped by 2.5 percentage points in the last 3 months. This means that all the older people with large sums of money tied up their C.D.'s are having to live on even less than their used to.

Answer 3

It will make it easier to buy a house or car which stimulates the whole economy.