Here's how much the Fed lowered interest rates

The Federal Reserve will meet eight times in 2025 and experts and consumers alike are eager to learn if and when there will be more rate cuts.

After 14 months of stagnancy, the Federal Open Market Committee (FOMC) lowered the federal funds rate three times in 2024, ending the year with a target range of 4.25% to 4.50%, the lowest since February 2023.

The fed funds rate determines how much financial institutions charge each other when lending or borrowing excess reserves.

That, in turn, influences interest rates on everything from mortgages to car loans to credit cards.

The FOMC meets eight times a year to consider lowering or raising the federal funds rate, a benchmark that governs overnight lending between commercial banks and impacts interest rates consumers pay.

The committee’s schedule through the end of 2025 is:

• Jan. 28-29, 2025
• March 18-19, 2025
• May 6-7, 2025
• June 17-18, 2025
• July 29-30, 2025
• Sept. 16-17, 2025
• Oct. 28-29, 2025
• Dec 9-10, 2025

Released Jan. 10, 2025, the Bureau of Labor Statistics’ December jobs report revealed surprisingly strong job growth, with nonfarm jobs soaring by 256,000 — far above the 160,000 forecast by Reuters’ poll of economists

Since the Fed typically slashes the benchmark rate to stave off layoffs, more jobs means it’s less likely to move the needle after its upcoming Jan. 29 meeting.

The CME Group’s FedWatch tool tracks the likelihood of target rate changes. The day the BLS’ job report was posted, the CME put the odds of a cut to the target range after the January gathering at just 2.7%.

When the Fed does lower its benchmark rate, “it affects everything a little differently and in different magnitudes,” said Amy Hubble, principal investment advisor with Radix Financial.

Rate cuts don’t mean a massive or sudden drop in credit card annual percentage rates (APRs). It will have an impact, however, because the federal funds rate is tied to the prime rate, which is used to calculate variable interest rates.

If you need a lower APR now, look into a 0% intro APR balance transfer card. It can give you time to pay off your balance without additional interest.  

Prioritize paying off your balance, though, so you’re not stuck with an even higher interest rate once the zero-interest period ends.

Savings

“CDs and other shorter-term cash vehicles, like money markets and bank savings rates, will see the rates drop almost immediately,” Hubble said.

That decline will continue with further cuts, so now would be a good time to lock in a CD with a high return.

Student loans

Lowering the fed funds rate will see interest rates on student loans drop, too. If you have newer loans and were hit with high rates, the next year or two may be a good time to consider refinancing.

SoFi offers terms of up to 20 years for refinancing student loans, with a 0.25% rate discount if you sign up for monthly autopay.

Mortgages

Because creditworthiness and loan terms play a bigger role, changes in mortgage rates are more complex.

“These rates may not necessarily move exactly in tandem with a reduction in the federal funds rate,” Hubble said. “But it’s still fair to assume that a lower fund rate will also mean a lower mortgage rate.”

One of our top picks for mortgage refinancing, Ally Bank doesn’t charge lender fees, which can save homeowners thousands.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Amy Hubble, principal investment advisor with Seattle-based Radix Financial. A certified financial planner, Hubble received a Ph.D. in consumer economics from the University of Georgia.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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