ECONOMY
What to expect from interest rates in 2024
Interest rates, set by the Federal Reserve, are set to be cut next year, but by how much and when?
High interest rates have been a problem for Americans all across the country, whether it has been paying or mortgage or running a business.
As soon as the Federal Reserve first held interest rates steady in August, attention has been fixed on when they will come down. Currently, the Fed maintains the rate between 5.25% to 5.5%.
They have been doing the job in bringing down inflation, which now stands aroudn 3.2%. While not quite at the central bank’s 2% target, the vast reduction of price rises over the last year means interest rates could come down soon.
Fed Chair Jerome Powell noted that the timing of rate cuts would be the Fed’s “next question.”
When could rates come down and by how much?
Markets are predicting that there will be at least six quarter-point rate cuts throughout 2024. This would bring interest rates to between 3.75% and 4%.
The first chance to lower interest rates would be at the next Federal Reserve meeting on January 28 and 29.
However, it is not expected that rate cuts will come as swiftly as then. Philadelphia Federal Reserve President Patrick Harker said earlier this week that he is against further rate hieks but is not yet ready to recommend rate cuts. He was part of the team voting on interest rate changes in 2023.
“It’s important that we start to move rates down. We don’t have to do it too fast, we’re not going to do it right away, it’s going to take some time.” Harker said.
“The job on inflation is not done,” he added. “But we are moving in the right direction, things are starting to look better and better.”
After the January meeting, the following meeting would be on 21 and 22 March. Should rates be held steady at the beginning of the new year, expect them to see their first reduction in March.