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The Federal Reserve’s first rate meeting is on Wednesday. Here’s what economists say about rate cuts.
The Federal Reserve has spent almost two years ratcheting up interest rates to tame inflation — a task that is paying off with steadily cooling price increases. On Wednesday, the central bank will hold its first rate meeting of 2024, prompting questions about when the Fed might privot and begin cutting rates.
The Federal Reserve has already indicated it expects three rate cuts in 2024, thanks to a slower pace of inflation; some Wall Street economists are predicting the central bank could issue as many as five cuts throughout the year.
Rate cuts could provide some relief to consumers and businesses, who have been paying more for mortgages, auto loans, credit card debt and other borrowing due to the Fed’s flurry of hikes. But it’s likely that rate-weary Americans will have to wait a few more months to see any relief, given that Wall Street is projecting the Fed will hold rates steady on Wednesday and that the first cut will occur in March instead, according to financial data provider FactSet.
“The Fed is being very cautious as it navigates the potential for future rate cuts,” noted LendingTree Senior Economist Jacob Channel in an email. “While it doesn’t want to leave rates high forever, it also doesn’t want to cut them prematurely and risk inflation spiking again.”
He added, “Owing to this, we’re likely going to see the Fed hold rates steady for a few more months while they wait to get an even clearer picture of how the economy is doing and where it’s likely to be headed.”
When is the Fed meeting this week?
The Federal Reserve’s Open Market Committee (FOMC) is scheduled to meet on January 30-31, with the group set to announce its rate decision at 2 p.m. Eastern time on January 31.
Chairman Jerome Powell will hold a press conference at 2:30 p.m. on Wednesday to discuss the FOMC’s rate decision and provide information on the central bank’s outlook.
When will the Fed cut interest rates?
Most economists believe the Fed will keep rates steady on Wednesday, holding the federal funds rate in a range of 5.25% to 5.5%, according to FactSet.
About 50% of economists polled by FactSet said they believe the first cut of 2024 will occur at the Fed’s March 19-20 meeting. Roughly nine in 10 economists believe the central bank will issue a rate reduction at its April 30-May 1 meeting, FactSet shows.
Among those predicting that March will provide the first rate relief is Goldman Sachs, with economist David Mericle writing in a January 27 research note that he believes a March 2024 cut will be followed by four additional rate reductions.
The central bank is likely to be cautious in its language on January 31 and avoid “sending a decisive signal,” he noted.
The Fed may want to “douse hopes of any early easing in policy,” noted David Kelly, chief global strategist at J.P. Morgan Asset Management, in a Monday research report. “This is, in part, because they are genuinely uncertain about how sticky inflation might be in an economy experiencing above trend economic growth and a still very tight labor market.
What is the inflation rate in 2024?
The first inflation report of 2024 will be released on February 13, when data on prices in January will be released by the Bureau of Labor Statistics.
Other recent measures of inflation are providing some evidence that inflation is continuing to cool, with December’s personal consumption expenditures — the Fed’s preferred measure of inflation — rising 2.9% on an annual basis, excluding food and energy. That’s close to the Fed’s goal of reducing inflation to an annual rate of about 2%.
Economists expect inflation will continue to cool in 2024, with Oxford Economics projecting that prices will increase at a 2.4% annual rate this year and then dip to 2.2% in 2025.
How will the Fed’s 2024 rate decisions impact your money?
With the Fed likely to hold rates steady on Wednesday, consumers probably won’t notice much difference.
Even so, mortgage rates have dipped during the past several months, declining to about 6.7% currently from a 20-year high of more than 8% last fall, according to data from Freddie Mac. The Fed doesn’t directly set mortgage rates, but its policies influence them, Channel of LendingTree noted.
“Even though the Fed hasn’t made any cuts, mortgage rates on 30-year, fixed mortgages are, on average, more than a percentage point lower now than they were in late October of 2023,” he noted. “This means we could see mortgage rates noticeably change while the Fed holds its target rate steady.”
Credit card rates might start to see some softening as well, Matt Schulz, LendingTree credit analyst, noted in an email.
“The credit card marketplace is so crazy-competitive that it is probably only a matter of time before some issuers tinker with lowering rates on new card offers, even just a tiny bit, to try and attract new customers,” he said.
How are consumers feeling about the economy?
Better, but still not great, according to recent polling.
About 27% of Americans told Gallup in a recent poll that they view the economy as good or excellent, up from 22% in December. Even so, about 45% of people rated the economy as poor, it found.
Inflation is a sticking point for many Americans, the survey group found. About six in 10 adults said that recent price increases have created financial hardship for their family, Gallup said.
NEW YORK — Former New York Gov. David Paterson and his stepson were attacked in New York City on Friday night, authorities said.
The incident occurred just before 9 p.m. on Second Avenue near East 96th Street on the Upper East Side, according to the New York City Police Department.
Police said officers were sent to the scene after an assault was reported. When officers arrived, police say they found a 20-year-old man suffering from facial injuries and a 70-year-old man who had head pain. Both victims were taken to a local hospital in stable condition.
In a statement, a spokesperson for the former governor said the two were attacked while “taking a walk around the block near their home by some individuals that had a previous interaction with his stepson.”
The spokesperson said that they were injured “but were able to fight off their attackers.”
Both were taken to Cornell Hospital “as a precaution,” he added.
Police said no arrests have been made and the investigation is ongoing.
The 70-year-old Paterson, a Democrat, served as governor from 2008 to 2010, stepping into the post after the resignation of Eliot Spitzer following his prostitution scandal. He made history at the time as the state’s first-ever Black and legally blind governor.
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A 17-year-old boy was critically injured and a person is in custody after a gunman opened fire on a SEPTA bus in North Philadelphia Friday evening, police said.
At around 6:15 p.m., Philadelphia police were notified about a shooting on a SEPTA bus traveling on Allegheny Avenue near 3rd and 4th streets in North Philadelphia, Inspector D F Pace told CBS News Philadelphia.
There were an estimated 30 people on the bus at the time of the shooting, Pace said, but only the 17-year-old boy was believed to have been shot. Investigators said they believe it was a targeted attack on the teenager and that he was shot in the back of the bus at close range.
According to Pace, the SEPTA bus driver alerted a control center about the shooting, which then relayed the message to Philadelphia police, who responded to the scene shortly.
Officers arrived at the scene and found at least one spent shell casing and blood on the bus, but no shooting victim, Pace said. Investigators later discovered the 17-year-old had been taken to Temple University Hospital where he is said to be in critical condition, according to police.
CBS Philadelphia
Through their preliminary investigation, police learned those involved in the SEPTA shooting may have fled in a silver-colored Kia.
Authorities then found a car matching the description of the Kia speeding in the area and a pursuit began, Pace said. Police got help from a PPD helicopter as they followed the Kia, which ended up crashing at 5th and Greenwood streets in East Mount Airy. Pace said the Kia crashed into a parked car.
The driver of the crashed car ran away but police were still able to take them into custody, Pace said.
Investigators believe there was a second person involved in the shooting who ran from the car before it crashed. Police said they believe this person escaped near Allegheny Avenue and 4th Street, leaving a coat behind.
According to Pace, police also found a gun and a group of spent shell casings believed to be involved in the shooting in the same area.
“It’s very possible that there may have been a shooting inside the bus and also shots fired from outside of the bus toward the bus,” Pace said, “We’re still trying to piece all that together at this time.”
This is an active investigation and police are reviewing surveillance footage from the SEPTA bus.