East Texas economist discusses impact of Federal Reserve interest rate cut
DEEP EAST TEXAS (KTRE) – The Federal Reserve decided to cut interest rates by 0.5%, bringing the key rate between 4.75% to 5%.
“They were sending a message out there that they feel they have won the battle with inflation and they’re trying to do some things now to ensure they we have solid economic growth,” Ray Perryman, president of The Perryman Group, said.
Perryman said one reason for the cut is to stimulate growth in the job market.
“Corporate borrowing rates will come down and that will lead to more investment into the economy. These are the kind of things the Federal Reserve is hoping to stimulate right now. Things that will keep the job market strong and lead to additional job creation,” Perryman said.
The decision should also help the average consumer. Rates will start to decrease all around.
“It means that the cost of buying a home will go down; the cost of purchasing any type of major auto loan. Those types of things will tend to go down,” Perryman said.
As far as rates for home buyers, Phillip Price, the branch manager for Highlands Residential Mortgage. said they have been slowly declining.
“This has created a frenzy in the market with potential refinance. Home buyers that were sitting on the sidelines waiting for this are ready to move forward. We’re seeing some new activity in the market,” Price said.
He said after people learned of the possibility of lower rates, buyers decided to wait. Now that it has happened, he believes homebuyers will move forward with the process.
“Housing affordability is a story of its own, and this is just one step in making houses more affordable for everyone,” Price said.
While many are relieved with the decision, it depends on the buyer if they will take advantage now or wait.
“You’ll have some people who will play a waiting game, there’s no question about that, but there will be others that go ahead and move forward because they have more assurance that this is what the future is going to look like,” Perryman said.
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