ELYRIA — Emergency rate cuts and a volatile stock market won’t have much of an impact on the local economy, several analysts predicted Tuesday.

After dipping 465 points at the start of the day, the Dow Jones industrials recovered to a loss of just more than 180 points by the close of trading Tuesday.

News that the Federal Reserve lowered two key interest rates to improve confidence in the market and curb the threat of recession likely aided in the recovery, but local consumers probably won’t see much happening as a result of the rate cuts.

 “I don’t see any real immediate benefit in Lorain County,” said Roger McFrederick, registered representative with Advantage Financial Services in Elyria and a former councilman in Elyria.

The Fed’s hope is that banks will find it profitable to lend more money, allowing borrowers to pump more money into the economy, he said. But, he added, with the spike in foreclosure rates, some people might be fearful of taking on more debt.

“There’s a lot of caution out there,” McFrederick said.

McFrederick said as a result of the rate cuts, lending institutions likely will drop their interest rates for products such as home loans and car loans to stay competitive, but that tends to only help new home and car-buyers. But it could also help homeowners with variable mortgage rates to refinance into a fixed mortgage and save some money.

“I think it will be a way for homeowners struggling to make their payments refinance a home into a fixed mortgage they can afford,” McFrederick said.

Michael Faehner of Faehner Financial Planning in Avon cautioned that it may take a while for banks to drop their interest rates, especially since the likelihood of the rates being returned to normal in a year or two is so high.

“When the Fed brings rates down, banks don’t bring their rates down that fast,” he said. “It won’t have an impact right now. It’s not like all of a sudden we’ll see a drop in rates.”

Some investments might also fall as a result of the rate cuts. Money markets and CDs won’t earn as much with the lower interest rates, said Mary Jo Terry, certified financial planner with Terry Financial Services in Grafton.

Otherwise, problems with the stock market shouldn’t send people into a panic, especially with retirement plans, Terry said.

“People should try not to get so emotional with these daily fluctuations,” Terry said. “We’ve seen it before. People remember how it was after 9/11 and don’t want to live through that again, but the market tends to rebound.”

The Associated Press contributed to this story.

Contact Adam Wright at 329-7151 or awright@chroniclet.com.

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