How the Federal Reserve’s Decision to Lower the Federal Funds Rate May Impact Recyclers

On Wednesday, October 29, the Federal Reserve lowered the Federal Funds Rate by 25 basis points, lowering the target range to 3.75% to 4.00%. This is the second consecutive meeting that the FFR was lowered by 25 basis points.

However, the 2-year treasury rate, and other rates, have moved very little during both of these reductions. Even over the past year of FFR reductions, the treasury rate has virtually remained unchanged. This means the market has not been affected by the reductions.

Potential good news for recyclers, Chair Jerome Powell states that a lower rate will increase demand for goods and services and this will increase hiring to meet the increasing demand. This could be good for the recycled materials industry if mortgage rates go lower, increasing affordability for new or existing homes. Car rates could be reduced too, thereby increasing auto sales. 

Recycling businesses with loans connected to the prime rate could see lower monthly payments.

According to Emily Sanchez, ReMA’s Chief Economist, “We support the lowering of the Federal Funds Rate. This will hopefully provide lower costs to consumer for durable items (appliances, autos, houses) that many have delayed purchasing. This will increase demand for recycled commodities used in producing these products.”

Photo by Chris Briggs on Unsplash.