Federal Reserve begins two-day meeting as experts anticipate small rate cut

The Federal Reserve is opening a two-day meeting today

(CNN)- The Federal Reserve is opening a two-day meeting today, and the outcome could directly affect the cost of mortgages, auto loans, credit cards and other borrowing for millions of Americans.

The Fed is widely expected to announce a quarter-point cut to the federal funds rate tomorrow — a small adjustment, but one that typically puts downward pressure on interest rates across the economy. The central bank continues to balance its dual mandate of maximizing employment while controlling inflation, both of which influence Americans’ job prospects and the prices they pay.

Economist Justin Wolfers of the University of Michigan cautioned against expecting sweeping changes.
“We shouldn’t look to the Federal Reserve to solve all of our ills or believe that a small shift in interest rates can make a big difference,” he said.

Meanwhile, a Supreme Court case could reshape the Fed’s independence. The justices are reviewing former President Donald Trump’s firing of a past FTC commissioner — a case that could expand presidential power over other independent agencies, including the Federal Reserve.

During Monday’s hearing, several conservative justices appeared sympathetic to Trump’s position.
Justice Brett Kavanaugh argued, “Independent agencies are not accountable to the people.”
Justice Neil Gorsuch added, “There is no such thing in our constitutional order as a quarter-branch of government that’s quasi-judicial and quasi-legislative.”

Trump has said he wants to remove Fed board member Lisa Cook and replace members with loyalists who would push for a large rate cut, regardless of economic data. Investors fear such an aggressive move could cause inflation to surge.

“Former Fed officials and economists warn that artificially low interest rates can backfire,” noted business reporter Matt Egan.

The Fed is expected to announce its rate decision on Wednesday.