The Federal Reserve cut interest rates. What happens next?

After a lengthy pause, the Federal Reserve on Sept. 17 announced a quarter percentage point cut to its benchmark interest rate. Economists say it is likely the first in a series of reductions that should make borrowing more accessible for consumers.

Fed Chair Powell described the reduction as “a risk-management cut” against the growing downside risks to employment. But with inflation still above the Fed’s 2% target – typically justification to raise rates or keep them steady – Powell acknowledged that the Fed faces “no risk-free path” in its decisions moving forward.

That uncertainty over risks was apparent in the Fed’s projections on future rate cuts, which showed a broad range of opinions among officials.

September’s cut was driven by the Fed’s concerns over the labor market, which has shown signs of weakening in recent reports. The Fed’s updated statement no longer refers to the labor market as “solid,” instead noting that job gains have slowed.

“It is such an unusual situation,” Powell said at a press conference following the Fed’s two-day meeting. “It’s quite a difficult situation for policy makers, and it’s not at all surprising to me that you have a range of views.”

The Fed on Sept. 17 published a quarterly chart known as the dot plot, which outlines what its 19-member Federal Open Market Committee expects for rate cuts moving forward.

While the median projection calls for two more cuts by year’s end, there was a range of views among officials.

Seven participants see no additional rate cuts this year, including one whose projection suggested they disagreed with the September cut. Two participants expect one more cut and the remaining 10 see two more cuts, including one who projected a rate low enough to require aggressive 50 basis point cuts in September, October and December.

Projections for 2026 were even more dispersed, with projections ranging from one to six quarter-point cuts for the year.

“Ask any of the forecasters whether they have great confidence in their forecast right now. I think they’ll honestly say no,” Powell said.

While President Donald Trump is pushing for aggressive rate cuts, the Fed is largely expected to take a more cautious approach this year, according to Michael Pearce, deputy chief U.S. economist at Oxford Economics.

The end result for consumers? A negligible impact on borrowing, at least in the near term, according to Pearce.

A quarter percentage point cut alone won’t make “too much of a difference” for borrowers, he told USA TODAY, but borrowers should see more noticeable benefits as the Fed continues to trim rates.

“By this time next year, some of those rates will be relatively lower – things like credit cards and auto loans,” he told USA TODAY, adding that lower rates should also boost loan acceptance rates.

While a Fed rate cut can help make car loans more affordable, it isn’t a guarantee.

Auto loans are influenced by the Fed’s fund rate, but also track longer-term bond yields like 5-year and 10-year U.S. Treasuries. Additionally, rates are “highly variable” based on credit scores, according to a note from Erin Keating, executive analyst at Cox Automotive.

“We are seeing that rates for subprime buyers continue to stagnate and even rise by a slight amount, but individuals with prime and super prime credit scores are enjoying much better rates,” Keating said.

The average auto loan rate as of August was 7% for a new vehicle and 10.7% for a used car, according to Edmunds.

Lower rates won’t necessarily have buyers rushing to their local dealership, according to Madhavi Bokil, senior vice president of credit strategy at Moody’s Ratings.

“Job prospects are more important for consumer spending on big-ticket items such as cars,” she said in an emailed statement. “Thus muted jobs growth could weigh on consumer spending even if the Fed cuts the policy rate.”

Mortgage rates tend to follow the path of the 10-year Treasury note, not the banking rates set by the Fed.

“What matters more there is where interest rates are going over that 10-year horizon,” Pearce said. “That’s much more affected by things like government borrowing, how fast the economy might be growing over the next 10 years. There are a lot of factors.”

Powell acknowledged that rate decisions can impact mortgage rates, but said the Fed would likely need to launch “pretty big” rate changes for it to matter “a lot” for the housing sector.

“There’s a deeper problem here, not a cyclical problem the Fed can address, and that’s pretty much a nationwide housing shortage,” he said.

The average 30-year fixed mortgage rate averaged 6.35% as of Sept. 11, according to Freddie Mac.

While credit card rates should drop a quarter percentage point within the next month or two, the dip isn’t expected to make much of a difference to borrowers, according to Ted Rossman, a senior industry analyst at Bankrate.

He notes that the average credit card charges just over 20%, per Bankrate’s weekly index. For a borrower with a balance of just under $6,500, a quarter-point rate drop would bring monthly payments down from $173 to $172, with interest over 219 months dropping from $9,426 to $9,300.

“Credit card rates are so high that this would still be high-cost debt even if rates fell a few percentage points, to something like 17 or 18 percent (which could take years),” Rossman said in an emailed statement. “They’re hardly going to notice.”

Savers will be getting less of a bang for their buck as the Fed drops interest rates. While financial institutions tend to be slow to lower the rates they charge borrowers, they’re quicker to drop the rates on savings accounts and certificates of deposit.

Trump’s moves to stack the Fed with his appointees have raised questions on whether the Fed will be able to maintain political independence.

New Fed Governor Stephen Miran was the only governor to dissent for a larger 50 basis point cut in September.

Miran, who was confirmed to the Fed’s board of governors on the eve of the September meeting, has taken a leave of absence from his role as chairman of the White House Council of Economic Advisers. This is the first time in 90 years someone with an affiliation at the White House served at the Fed simultaneously, according to a note from KPMG chief economist Diane Swonk.

But it’s also worth noting that Governors Christopher Waller and Michelle Bowman, Trump appointees who dissented for a rate cut in July, voted with the consensus in September, JP Morgan economist Michael Feroli said in a note.

“While this might take them out of the running to be the next chair, it does signal that the independence of the institution may be more durable than some have feared,” Feroli said.

Meanwhile, an appeals court recently gave Governor Lisa Cook the OK to participate in Fed meetings as she battles Trump’s move to fire her.

This article originally appeared on USA TODAY: The Fed trimmed its key interest rate. What that means for you.