Finance professor says people should be ‘cautiously optimistic’ about Fed rate cut

The Federal Reserve cut its key interest rate by a half-percentage point on Wednesday.

University of Arkansas Professor of Finance Professor Tomas Jandik said that while these benefits may not be noticed right away, they could be two-fold.

He said the rate cut could lead to businesses having more money to expand or plan projects, and that could mean more labor is needed and therefore more jobs.

“With unemployment ticking up, it does suggest that there are going to be jobs to go back to if companies are going to find new projects, new venues to make profits and I think that’s the hope of the Fed with this lowering of the rate,” Jandik said. “I think that if they had kept it [interest rate unchanged] longer, companies could be getting into financial troubles.”

Jandik said people should be “cautiously optimistic” about the long-term impacts of this initial rate cut.

He said, if everything goes as planned, the Fed will make additional rate cuts later this year and in the years to come.

Watch this video for more from Professor Jandik.