The Federal Reserve acted as expected to lower the benchmark Fed funds rate for the first time in this cycle. Market observers had fully expected a rate cut going into the September 2024 meeting, but had been divided between a 1/4 point and a 1/2 point hike. The Fed chose to start with a larger move, which Federal Reserve Chairman characterized as a decisive recalibration towards a more neutral stance (as opposed a restrictive stance), lowering the rate by 50 basis points to a target of 4.75 to 5.00%.
While the decision was not unanimous, the Fed's large move indicates that it believes that it has largely restored price stability with inflation measurements indicating that the pandemic price burst has eased and inflation is well on its way to the Fed's 2% target.
The Fed has been somewhat reluctant to provide further guidance on additional rate moves. Bond markets is clearly pricing in at least one additional 25 basis point cut before the end of 2024 and several additional cuts in the first half of 2025.
Meanwhile consumers can expect to see lower savings rates, CD rates, mortgage rates and home equity rates.
Add your Comment
or use your BestCashCow account