In a major milestone in the Fed's fight against inflation and consumers' fight against higher cost of living, the Federal Open Market Committee on Wednesday announced a greater than expected 0.5 point interest rate cut to a range of 4.75%-5%.

Fed Chairman Jerome Powell said:

“We concluded that this was the right thing for the economy and the people we serve."

The FOMC said they reduced interest rates because they are confident that inflation is coming back down to their 2% goal, and they want to prevent the job market from softening further.

Analysts speculate that the big cut comes now because the Fed was "behind the curve" in July when the decision to leave intertest rates as-is was taken just 2 days prior to a disappointing jobs report being issued.

On Wednesday, the S&P 500 and Nasdaq both surged on the Fed announcement, but at the end of the day closed on a modest drop.

The value of the USD abroad fell slightly, but because the rate cut had been forecast for so long it had likely already been priced into the value of the dollar.

US consumers with big variable-rate credit-card balances stand to benefit most from the rate cut.

Because mortgage lenders generally anticipate Fed policy changes, recent mortgage rate drops likely already reflect the September rate cut by the Fed. Some homeowners may be able to refinance in order to lock in a lower interest rate and reduce monthly payments.

Savings account interest rates will likely fall, making CDs and money market accounts more attractive.