Saturday, October 5, 2024
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Expert: Interest Rate Cut Provides Opportunities

The Federal Reserve’s decision to cut interest rates Wednesday will likely boost the overall economy.

That according to Tennessee Tech Finance Professor Justin Lee. Lee said households across the country are likely to start making large purchases they had been holding off like cars or houses. Lee said the new rates also have the potential to make the Upper Cumberland’s growing real estate market more affordable.

“The lower interest rate will also be a better opportunity for people who will be developing around this region,” Lee said. “And likewise for the businesses who are thinking about making a larger-scale investment, this decision will definitely help them.”

The half percent reduction, the Fed’s first rate cut since 2020. Lee said the decision to cut the rate was expected by many financial experts but the exact size of the cut was unknown until the numbers were made official.

“The surprise really came from the fact that the Federal Reserve decided to go aggressively in cutting the rate,” Lee said. “And I guess that’s where the market saw a bit of joy because after the announcement was made the stock market responded positively.”

Lee said this is an important time for people to reconsider their investment decisions as certain items become less profitable and new opportunities arise.

“It’s, again, a good time to think about how you should go about changing your investment strategies,” Lee said. “Such as considering participation in a stock market or other such of, you know, financial instrument(s) that could offer you (a) more improved set of returns now that the overall federal fund rate and the availability in safer market(s) is dwindling.”

Lee said it will be interesting to see what the rest of the year has in store for the Federal Reserve as they work to continue this improvement effort.

“There’s going to be, I believe two more meetings (in) November and December and depending on how the course of action happens by the Federal Reserve we may actually see the case of achieving self-lending and getting out of this bit of recessionary or, you know, contractionary period,” Lee said. “And then step into seeing (a) more improved economic situation.”

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