Penn State professor weighs in on Fed cutting interest rates, how it could help the economy

UNIVERSITY PARK, Pa. (WTAJ) – The Federal Reserve cut interest rates for the first time in four years, and some experts are saying that it could benefit the housing market.

The last time the Fed cut rates was during the COVID-19 pandemic to stimulate the economy during a tough time. Now Penn State Supply Chain Management Professor Brent Moritz says that it is more of a preventative measure against a potential upcoming recession.

The cuts are looking to lower mortgage rates in the housing markets, which could make it easier to find homes in places like State College. Moritz says there is another benefit for the market as well.

"With lower interest rates, that encourages more development," Moritz said. "It'll be easier for developers to get loans, to start new housing projects, build more apartment buildings."

Centre County's government has already been submitting requests for more housing, so the lower rates could help them with that project.

However, Moritz says "it's hard to say" how the cuts will affect the economy long term, and that there is a chance they do not stimulate the economy enough – ultimately leading to a recession.