A second Fed rate cut is likely, with research indicating there is a 91% chance of the Fed reducing its target interest rate by 25 basis points in September 2019. In response, WalletHub conducted a survey of consumers to determine how they feel rate cuts can impact their lives and their debt.
According to WalletHub, if recent rate hikes are any indication, we won’t see much of a change following a September rate cut, as the mortgage markets have already accounted for the move. However, that is not to say Fed rate changes don’t make mortgages more or less expensive for new borrowers. WalletHub’s analysts estimate that this rate cut has already decreased the cost of new mortgages by around 10 basis points.
WalletHub’s survey revealed that 68% of people say the interest rates on their loans are currently too high, while 72% of people say it’s good for their own wallet when the Federal Reserve cuts interest rates. Additionally, 56% of people say it’s good for the economy when the Federal Reserve cuts interest rates.
According to another study from Bankrate, 67% of economists believe the Fed will make two or more cuts, while 14% predicted one more. Additionally, another 10 percent predict rate cuts as well as the return of quantitative easing.
The likelihood of more rate cuts is due in part to a deteriorating economic outlook. Ninety percent of economists in Bankrate’s survey said that the risks to the outlook were tilted toward the downside, up from 80 percent in the second quarter.
“The question we keep asking ourselves is, how many more blows can this aging business cycle take?” Bernard Baumohl, Chief Global Economist at the Economic Outlook Group told Bankrate. “We expect the economy will barely avoid a recession next year, and the consumer should get credit for that. But the escalating trade dispute, along with the havoc it has caused to supply chains and how it dampened economic growth worldwide will all be with us — at least until 2021.”