At year start, about 9 in 10 economists had forecast that the Fed would cut its benchmark rate at its May 1 meeting.
Yet shifting economic winds and stubbornly high inflation have complicated policy makers’ plans.
“I understand why people are concerned, and perhaps a little upset, that the Fed isn’t champing at the bit to cut rates.”
But, he added, if the Fed cut rates prematurely and inflation ticked up even higher, that could make the economic situation worse for many consumers and businesses.
When is the Fed meeting this week?
The Federal Reserve’s Open Market Committee will announce its rate decision on Wednesday at 2 p.m. Eastern time.
When will the Fed cut interest rates?
About half of economists are forecasting a cut at the Fed’s September 18 meeting, while a majority are penciling in a cut at its November 7 meeting.
The Federal Reserve will make its third interest rate announcement of 2024 on Wednesday afternoon, but consumers shouldn’t expect any immediate respite from high borrowing costs.
When the year began, roughly nine out of ten economists predicted that the Fed would lower its benchmark rate during its meeting on May 1. However, the plans of policy makers have become more complex due to shifting economic winds and persistently high inflation. That’s why, according to economists surveyed by financial data firm FactSet, Wall Street now expects the Fed to keep rates unchanged today.
According to FactSet’s data, the majority of experts now predict that the Fed will not lower interest rates until later in 2024, probably not until September or November of that year. In other words, even as the price of goods and services continues to rise, consumers will probably have to deal with higher payments on all loans—from credit cards to mortgages.
Senior economist at LendingTree Jacob Channel told CBS MoneyWatch, “The Fed has said time and time again that inflation would be really difficult to tame, and they are more than willing to keep rates high until inflation becomes more manageable.”. “I can see why people are worried—and maybe even a little miffed—that the Fed isn’t lowering interest rates right now. “.
He clarified, though, that things might get worse for a lot of consumers and companies if the Fed lowered rates too soon and inflation increased even further.
This week’s Fed meeting is scheduled for when?
It will be revealed by the Federal Reserve’s Open Market Committee on Wednesday at 2:00 p.m. m. Eastern standard time. Press conference with Fed Chair Jerome Powell scheduled for 2:30 p.m. me. to respond to inquiries regarding its decision and to provide an overview of the central bank’s economic outlook.
When will interest rates be lowered by the Fed?
Approximately 97% of economists polled by FactSet believe that the Fed will maintain its current benchmark rate of between 5 and 5 percent, so it is unlikely to occur today. Indeed, Wall Street investors now only expect one rate cut in 2024, even though the Fed penciled in three cuts earlier this year.
Stubborn inflation is the main problem; it has been rising this year due to rising housing and gas prices despite the Federal Reserve’s efforts to control it. March saw a 3 percent annual increase in consumer prices, up from a 3 point 2 percent increase in February and a 3 point 1 percent increase in January.
It is projected by about half of economists that the Fed will cut on September 18 and by most that it will cut on November 7. Rather than a more substantial cut of half a percentage point, Channel pointed out that those reductions are probably going to amount to a quarter of a percentage point each.
Analysts’ expectations for future rate cuts have sharply declined, which is not surprising, according to Stephen J. Rich, Mutual of America Capital Management’s CEO, via email. “At this point, we estimate that two cuts totaling 0.5 percentage points could occur this year. “.
According to Solita Marcelli, Chief Investment Officer Americas at UBS Global Wealth Management, the Fed will need to maintain higher interest rates for an extended period of time. The research note states that she anticipates the Fed to cut its benchmark short-term rate twice this year, most likely beginning in September.
What financial effects will the Fed’s decision have on you?
According to Channel, be prepared for ongoing high borrowing costs.
He stated, “We’re probably going to have to get used to the average rate on a 30-year mortgage being above 7 percent again in light of the meeting.”. “Those terrifying 7 percent rates are most likely going to remain. ****.
According to him, credit card rates, which have hit all-time highs, are also not going to decrease.
For a considerable amount of time to come, borrowing money will remain relatively expensive, Channel continued. “We won’t wake up in August to find that rates have returned to zero.”. “.
The bright side, if there is one, is that savers can now find higher-interest savings accounts with yields over 5 percent, according to DepositAccounts . com’s banking expert Ken Tumin. Certificates of deposit and other savings options may also have competitive rates.
