INDIANAPOLIS (WISH) — The Federal Reserve on Wednesday cut its key interest rate by a quarter-point and projected it would do so twice more this year as concern grows at the central bank about the health of the nation’s labor market.

So, what does it mean for Hoosiers’ wallets? News 8 asked economist and professor Kyle Anderson from the Kelley School of Business at Indiana University.

He says consumers may not see a big difference just yet.

The interest rates are what banks can charge for short-term loans, and that can create a trickle-down effect on jobs, and home, auto and credit card loans.

Anderson said, “The main reason that the Fed cuts rates is because they want to spur business investment, and so when businesses can borrow money more cheaply, they’re more likely to make bigger investments that should improve the job outlook.”

For consumers wondering if the rates can impact their credit card interest, Anderson said not yet. “Credit card companies kind of lower rates with competitive pressure. Given that we’ve only seen rates come down by a quarter of a percentage point, it’s really not that much, so credit card companies probably aren’t going to respond right away.”

Anderson said mortgage rates are the lowest they’ve been all of 2025 and that could be a good sign for people looking to purchase homes. But, he suggests, potential homebuyers might score a better deal if the Fed cuts the rates again later in 2025.

The IU economist said he expects to see two interest rate cuts in October and December. “I do think some of these bigger and larger-term interest rates are going to come down, things like a 30-year mortgage and a 15-year mortgage, or even auto loans. We may see them coming down.”

Anderson said federal rate cuts can make homes and vehicle loans more affordable, but that’s not guaranteed due to other factors including inflation rates and the job market. Either way, he said, the goal for the rate cut is about reinvigorating the economy. “That’s the hope when you see interest rates go down, that businesses are more open to borrowing and ultimately hiring and investing in facilities and jobs here in Indiana.”

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