WASHINGTON — (AP) — Two years after launching an aggressive fight against inflation and one year after leaving its benchmark interest rate at a near-quarter-century high, the Federal Reserve is expected to signal this week that it will likely reduce borrowing costs as soon as September.
A rate reduction this fall — the first since the pandemic — would amount to a momentous shift and a potential boost to the economy. Fed rate cuts, over time, typically lower borrowing costs for such things as mortgages, auto loans and credit cards.
A single cut in the Fed’s key rate, now at roughly 5.3%, wouldn’t by itself make much difference to the economy. Financial markets widely expect it. Some borrowing costs have already dropped slightly in anticipation of the move. As a result, the main question for the central bank will be: How fast and how far will the policymakers ultimately cut rates?
It’s a question of keen interest to both major presidential candidates, too. …