Welcome to the Daily 5 report for Tuesday, Dec. 9.
The Federal Open Market Committee, known to friends and family as "the Fed," is deliberating for the eighth and final time this year. Prognosticators are betting on a quarter-point rate cut being announced Dec. 10, the second straight reduction to the federal funds rate target.
Dealerships are eagerly watching the goings-on at the Eccles Building in Washington. (Historical fact: It's named for Marriner S. Eccles, Federal Reserve chairman during the Great Depression. And you thought you had a bad job!)
That's because an interest rate reduction can have a ripple effect on dealership floorplan interest rates and the new- and used-vehicle interest rates indirect lenders offer auto buyers.
But how much will it help vehicle payments? Maybe not much, looking at J.D. Power's November forecast. It showed the average interest rate fell 0.3 percentage points from a year ago to 6.1 percent, but the average monthly payment in November rose 2.6 percent year over year to $760.
That's the highest monthly payment on record for November as the average new-vehicle price grew 1.6 percent to $46,029, according to J.D. Power.
So even if the Fed lowers rates as expected, automakers and dealerships still have some work to do as consumers' ongoing struggle with affordability issues — from the grocery aisle to the showroom floor — continues.
That's it for today. Have a great rest of your day. If you want to view this story on your browser, click here.
— Dan Shine, senior editor
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