The Federal Reserve cut interest rates for the first time in four years on Wednesday, reducing its key rate by half a percentage point.

The Fed’s decision to cut rates comes as it sees the economy moving in a positive direction.

“The U.S. economy is in a good place, and our decision today is designed to keep it there,” said Fed Chair Jerome Powell at the Fed’s post-meeting press conference.

Despite job growth slowing down a bit and unemployment slightly increasing, inflation is more consistently moving toward its 2% goal and risks to both employment and those inflation goals are near equal, according to a release from the Federal Reserve Board.

The new target range for the federal funds rate is now 4.75% to 5%, and Fed officials expect another full percentage points of cuts in 2025.

Here’s what to know about interest rate cuts and how they could impact Florida mortgage rates and more.

What is the current Fed interest rate?

The new Fed interest rate is 4.75% to 5%, which is down from a 23-year high of 5.25% to 5.5%, according to USA Today.

Is inflation going down?

Prices are still high, but the rate at which they are increasing has slowed to a crawl compared to the 40-year high of about 7% in mid-2022.

Since April, inflation has decreased to under 3%, close to the Fed’s 2% goal. Barclays estimates a report later this month will show it fell to 2.2% in August from 2.5% the previous month, while the core measure ticked up to 2.7% as goods prices fell while the cost of services such as rent and health care marched higher, according to USA Today.

What is the current interest rate on mortgages in Florida today?

The Fed doesn’t set mortgage rates, but the rate cut will inevitably trickle down and impact mortgage rates. That means you won’t see an immediate change to interest rates right out of the gate. Potential homebuyers will instead see a more gradual decrease.

Here’s a look at the average interest rate for Florida mortgages, according to Zillow:

• 30-year fixed: 5.6%

• 15-year fixed: 4.98%

• 5-year ARM: 6.19%

Will credit card rates drop?

Yes, but experts say people shouldn’t expect any dramatic changes to their bill in the near future. Credit card rates are tied to more than just what the Fed does. When setting their rates, lenders factor in balances, defaults and savings. In other words, banks calculate their credit risks just like an insurance company creates complex risk assessment models to calculate premiums.

Buyers can borrow more money as interest rates fall

An often added perk, though not guaranteed (see above), of lower interest rates is that lenders tend to be less risk-averse. When interest rates are high, they tend to prefer less risky borrowers, but lower rates could see lenders easing up on who they may provide loans to and how much.