On Sept. 18, 2024, the U.S. Federal Reserve (Fed) reduced its benchmark federal funds rate by 0.50 percentage points, with more cuts expected in coming months. This is good news for consumers with adjustable-rate debt (for example, credit card interest) and those hoping to finance a car or home purchase. State and local governments will also qualify for more favorable borrowing rates. On the other hand, most savers and new bond buyers will see investment yields drop. Fed rate cuts typically are intended to stimulate the economy and can have tax implications. Increased economic activity and spending generally result in higher business and sales tax collections.
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