The magnitude of the Federal Reserve’s recent rate cut — 0.50 percentage points — took most economists by surprise, many had expected a more modest 0.25 percentage point cut. Steve Scranton, Chief Economist at Washington Trust Bank, highlights that businesses and consumers with variable-rate loans are set to benefit, but savers will feel the pinch.
The main takeaway is that the period of rising interest rates has ended, and a period of declining interest rates is beginning. The size and frequency of future reductions in short-term rates remains to be determined.Steve Scranton
Chief Economist