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11/07/2024

Fed Pivots: With a Big Cut, the Journey to Stronger Retail Demand Begins

Source: Fleet Management Weekly

The Federal Reserve changed their tune dramatically from their stance at the last official meeting on July 31 by cutting the Fed Funds Rate by 50 basis points, double the consensus expectation of a 25-basis-point cut.

This cut will be a positive change that will eventually help bring auto loan rates down. Interest expense on credit cards has been crowding out spending on goods and services and has likely contributed to delinquencies and defaults on credit cards and auto loans.

It may take several weeks or even months for consumers waiting on lower auto loan rates to see any meaningful change. With auto loan performance still shaky, lenders will be reluctant to reduce the spreads they charge to compensate for risk. That means that auto loan rates are likely to be sticky on the way down.

To read the detailed article on Cox Automotive, click here.

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