On Wednesday, September 17, Jerome Powell, the head of the US Federal Reserve, finally announced a quarter-point cut in interest rates after a long period of stability.
Although pressured by the US president, Powell delayed his decision as long as possible, as US inflation is still above 2% at the moment. However, he eventually gave in: job creation in the United States has slowed in recent months. Faced with a difficult choice, the Fed admitted that there was no “no risk-free path,” and the current priority is to protect job creation and avoid rising unemployment.
That said, the impact of the cut is fairly small, but economists expect further cuts in the coming months. The Fed’s 19-member Federal Open Market Committee, which met for two days before Powell’s announcement, published its interest rate projections: two further cuts can be expected before the end of the year.
However, opinions are very divided among the members, and even the decision to cut in September was hotly debated. There is no guarantee that further cuts will take place. The projections for 2026 are even more disjointed and less unanimous. “If you ask forecasters whether they’re confident in their projections right now, none of them will say yes. The range of plausible outcomes is unusually wide”, Powell concluded.
What impact will this have on us?
In concrete terms, this translates into an immediate drop in the 30-year mortgage rate: the average rate from Freddie Mac (Federal Home Loan Mortgage Corporation) was 6.35% on September 17. According to Powell, the real problem in the U.S. real estate market is the lack of inventory of properties for sale, which is not currently the case in Florida, and the current decline should not have a significant impact.
On the other hand, interest rates on savings accounts will certainly fall. Financial institutions usually react quickly when it comes to lowering rates on their customers’ savings accounts and certificates of deposit.
However, interest rates on credit card repayments are so high that the impact will be negligible. As for auto loans, they will be only slightly affected, as they are more sensitive to borrowers’ credit scores and changes in 5- and 10-year U.S. Treasury bond yields. The average rate in August 2025 was 7% for a new vehicle and 10.7% for a used car.
Exchange rates
Lower interest rates could cause the US dollar to fall, which directly impacts the exchange rate with the Canadian dollar and the euro. The exchange rate is 1.38 with the Canadian dollar (compared to 1.44 in January 2025) and 1.18 with the euro, the lowest since September 2021. Although the US dollar remains strong for Canadians, this decline slightly improves the situation compared to the beginning of the year for real estate investments in Florida and snowbird stays.
