ST. LOUIS – The Federal Reserve announced its first interest rate cut in more than four years on Wednesday. The key rate was lowered to roughly 4.8%, down from a two-decade high of 5.3%.

“Today, the Federal Open market Committee decided to reduce the degree of policy restraint by lowering our policy interest rate by a half percentage point,” Federal Reserve Chair Jerome Powell said.

The half-point cut is more aggressive than some expected from the fed.

“Personally, I’m a little surprised that they went for 50 just because we’re so close to an election, and they don’t typically start using cycles with larger cuts,” Katherine Watt, housing reporter at CNET Money, said.

Watt says over time the rate cut should lower borrowing costs for mortgages, auto loans and credit cards.

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“It’s just not going to happen all that quickly. Mortgage rates are often really quick to rise and slow to fall. So, it’s looking like there’s a glimmer of hope in the housing market,” Watt said.

But with rising home prices, limited inventory, and other serious factors facing consumers, Watt suspects the rate cut won’t be a consumer cure-all. She cites results from a recent CNET money survey highlighting current barriers to home ownership.

“36% cite the overall high cost of living as a primary obstacle. 19% cite debt, whether that’s medical debt or student debt, and 31% also said that getting a raise or having higher wages would make home buying more accessible,” Watt said.

In his remarks Wednesday, Chairman Powell said, “The U.S. economy is in a good place,” adding, “Our decision today is designed to keep it there.

“We’re committed to maintaining our economy’s strength by supporting maximum employment and returning inflation to our 2% goal.”

The Fed meets two more times this year and policymakers are expected to cut their key rate an additional half-point. More rate cuts could be coming in 2025 and 2026.

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