Thanks to its latest decision on Wednesday – its final one for 2025 – the Federal Reserve has now reduced its key overnight lending rate by 1.75 percentage points since it began its rate-cutting cycle in September 2024.

The reduction lowers the federal funds rate — what banks charge each other for short-term loans — to between 3.5% and 3.75%, down from its prior range of 3.75% to 4%. The Fed's decision marks the third consecutive rate cut since September, lowering the federal funds rate by a total of 0.75 percentage points this year.

The Federal Reserve cut its benchmark interest rate a quarter of a percentage point on Wednesday, opting for its third interest rate cut this year in an effort to revive a sluggish labor market. The reduction of interest rates could deliver some relief for mortgage and credit card borrowers.

The highest money market account rate available today is 4.22% Changes from the Fed or your bank can quickly change money market rates Online banks typically offer the most competitive yields on the market As of today,

The Fed lowered its benchmark interest rate by a quarter percentage point, in an effort to shore up a weakening job market. With inflation remaining stubbornly high, it was not a slam dunk decision.

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The FOMC elects to cut interest rates in December to 3.5% -3.75%, but Powell siignals that policy may now by neutral, making a January cut less probable.

The cut of a quarter-point will likely make it cheaper for average Americans to secure mortgages, pay credit card debt or finance cars.