The Federal Reserve announced that it’s cutting interest rates by 25 basis points during its September 17-18 meeting, lowering the federal funds rate to a target range of 4.00 to 4.25 percent.

This marks the Fed’s first rate cut since December 2024, ending a streak of five consecutive meetings where the Fed kept rates steady at 4.25-4.50 percent. The decision comes as concerns about the softening labor market have taken precedence over persistent inflation concerns.

Federal Reserve Chair Jerome Powell cited the “shifting balance of risks” between the Fed’s dual mandate of price stability and full employment, noting that “downside risks to employment are rising” while inflation, though still above target, has shown some moderation from recent peaks.

Here are the winners and losers of the Fed’s latest rate decision.

Winners

1. Borrowers

The Fed’s rate cut provides some relief for borrowers, though the impact will vary by loan type and timing. If you’re an existing borrower with fixed-rate debt — say, you locked in a 30-year fixed-rate mortgage in recent years — this cut doesn’t directly affect your current payments, but it improves the overall borrowing environment.

For new borrowers, the rate cut should begin to ease borrowing costs across various loan types. The average interest rate on personal loans was 12.39 percent as of September 2025, and the Fed’s decision should put some downward pressure on those rates over time.

Those with floating-rate debt will see more immediate relief. If you have an adjustable-rate mortgage, home equity line of credit, or variable-rate personal loan, your rates should begin to decline following the Fed’s action.

2. Credit cards

Many variable-rate credit cards change their rates based on the prime rate, which moves in lockstep with the federal funds rate. The Fed’s cut should provide some relief for cardholders carrying balances, though rates remain elevated.

The rate cut is largely a non-issue if you’re not carrying an ongoing balance and pay your card in full each month.

3. Stock investors

The Fed’s decision to cut rates is generally positive for stocks, as lower rates make equities more attractive relative to bonds and fixed-income investments. The rate cut also signals the Fed’s commitment to supporting economic growth.

Markets had largely anticipated this cut, so the immediate reaction may be muted unless the Fed signals a more aggressive cutting cycle ahead.

Losers

4. Savings accounts and CDs

The Fed’s rate cut means that banks will likely begin lowering rates on savings accounts, CDs, and money market accounts. While the best rates still offer attractive returns, the trajectory is clearly downward.

The downside of the Fed cutting interest rates is that returns on savings accounts, money markets, and CDs will start declining. Savers should lock in current CD rates while they remain relatively attractive, especially for longer terms.”

High-yield savings account rates, which currently hover around 4-5 percent, will begin to fall as banks adjust to the new rate environment. However, these accounts still offer significantly better returns than traditional savings accounts at major banks.

5. Money market fund investors

The approximately $7.6 trillion sitting in money market funds will see yields decline following the Fed’s cut. Money market funds, which have been offering yields above 4 percent, will see their returns fall as the underlying short-term securities they invest in reprice lower.

Investors may need to consider whether to maintain their money market positions or explore other savings alternatives as yields decline.

Mixed Impact

6. Mortgage borrowers

While the federal funds rate doesn’t directly impact mortgage rates, which depend largely on the 10-year Treasury yield, the Fed’s dovish stance could put downward pressure on longer-term rates over time.

The rate cut is more immediately beneficial for those with adjustable-rate mortgages or considering a home equity line of credit (HELOC), as these products are directly tied to short-term rates.

Home prices remain elevated, and while lower borrowing costs may eventually help affordability, the housing market continues to face challenges from both price and financing perspectives.

7. Bond investors

The Fed’s rate cut is generally positive for existing bond holders, as bond prices typically rise when rates fall. However, the impact depends on the type and maturity of bonds held.

However, new bond investors will face lower yields going forward. Those looking to purchase new bonds or CDs will find lower rates available compared to recent months.

8. The U.S. federal government

The rate cut provides modest relief for federal borrowing costs, though the impact on the massive $36+ trillion national debt will be gradual. As older debt matures and is refinanced, the government will benefit from slightly lower rates.

However, the government’s borrowing costs remain elevated compared to the ultra-low rate environment of recent years. The rate cut helps at the margin but doesn’t dramatically alter the fiscal outlook.

Bottom line

The Fed’s 25 basis point rate cut signals a shift toward supporting the economy as labor market concerns take precedence over inflation risks. While the immediate impact may be modest, it sets the stage for potential additional cuts if economic conditions continue to soften.

Smart consumers can position themselves by locking in current CD rates before they fall further, taking advantage of balance transfer credit cards while the savings are meaningful, and shopping around for the best savings account rates while they remain attractive.

With additional rate cuts likely later in 2025, consumers should expect continued changes in borrowing and saving rates. Those with variable-rate debt will benefit from further cuts, while savers should secure good rates now before they decline further.