The Fed could do something today it hasn’t done in 16 years — here’s what it means for your 401(K), loans, credit card and mortgage

Federal Reserve watchers are undecided about how big a cut the central bank might make to interest rates at the close of its latest meeting on Wednesday.

Normally, markets have a general idea of ​​what will happen at the meeting, but that is not the case this time.

“I expect them to cut 50 basis points, but I suspect they’ll cut 25. My hope is 50, because I think rates are too high,” said Mark Zandi, chief economist at Moody’s Analytics. CNBC.

“They have fulfilled their mandate of achieving full employment and bringing inflation back to their target level, and that is not consistent with an interest rate target of around 5.5 percent. So I think they need to normalize rates quickly and they have plenty of room to do so.”

There is reportedly an unusual split among Federal Reserve policymakers, who have typically voted the same way on interest rate decisions.

“I guess they’re divided,” former Dallas Federal Reserve President Robert Kaplan told the outlet earlier this week.

‘There will be some at this table who think like me, who are a little behind the times and would like to get off to a good start and would rather not spend the fall chasing the economy.’

There will be others, he added, who want to be more careful and manage risk.

Investors are anxiously awaiting whether the Fed will cut rates by a cautious quarter-point or a bolder half-point, a move it has not taken in 16 years.

The Federal Reserve has not cut borrowing costs this much in one go since the midst of the financial crisis in late 2008.

At the time of writing, investors were forecasting a 57 percent chance of a 50 basis point cut, and a 43 percent chance of a 25 basis point cut, according to the CME FedWatch tool.

An interest rate cut of any size will impact Americans’ finances, from credit cards and savings accounts to 401(K) plans and mortgages.

The Federal Reserve has kept benchmark borrowing costs at a 23-year high of 5.25 percent to 5.5 percent since July 2023 after an aggressive rate-hiking campaign to curb inflation.