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A Rate Cut in Name Only
The Federal Reserve wrapped up its December monetary policy meeting today, capping the two-day discussions with a three-quarter-point reduction in the fed funds rate, the lowest rate on record.
But will that help sectors like auto finance? I doubt it. The reason people aren’t buying cars is because they hesitate to plunk down $20,000 at a time when the economy is so shaky. It doesn’t matter much if the interest rate is 6%, 3%, or 0.5%.
It seems like the auto market, for one, is really caught between a rock and a hard place. Vehicle sales have been slowing for months, and even low interest — or no interest, for that matter — will reverse the trend. For auto financiers, specifically, it appears that we’ll just have to hang tight until things improve.
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