CBS News
Federal Reserve is expected to make 3rd consecutive rate cut this week. Here’s what to know.
The Federal Reserve on Wednesday will make its final interest rate decision of 2024, capping a year during which the central bank provided some financial relief to inflation-weary borrowers in September by ushering in its first rate reduction in four years.
On Dec. 18, the Federal Reserve is likely to make its third consecutive reduction of 2024, according to economists polled by financial data firm FactSet. Yet many experts are also bracing for a slower pace of cuts in 2025 given the nation’s still-sticky inflation rate and some of President-elect Donald Trump’s proposed economic policies, which, if enacted, could prove inflationary.
The Federal Reserve has been battling inflation since March 2022, when it began ratcheting up rates to cool the economy, eventually pushing its benchmark rate to its highest level in 23 years. While inflation has moderated considerably since then, November’s Consumer Price Index rose 2.7%, outpacing the Fed’s goal of driving down inflation to a 2% annual rate.
That signals the battle against inflation isn’t yet over, though the November inflation report was in line with economists’ expectations. At the same time, the unemployment rate has inched higher this year, sparking concerns from the Fed about weaknesses in the labor market, and helping open the door to its recent rate reductions, noted one economist.
“The Fed will likely move ahead with another 25-basis point cut at its December meeting,” noted Jacob Channel, senior economist at LendingTree, in an email, adding,”This could be the last cut for a while though,” he said.
“Because the upcoming Trump Administration’s policies might cause a resurgence in inflation or otherwise throw the economy off balance, the Fed might choose to take a wait-and-see approach and hold rates steady at their January meeting,” Channel noted.
What date is the Federal Reserve meeting in December?
The Federal Reserve’s Federal Open Market Committee (FOMC) meeting is from Dec. 17-18, marking its last meeting of the year.
What time does the Federal Reserve announce rates?
The central bank is set to announce its rate decision on Dec. 18 at 2 p.m. ET.
That will be followed by a press conference with Federal Reserve Chair Jerome Powell at 2:30 p.m. ET, during which Powell will discuss the Fed’s economic outlook and take questions from reporters.
Will the Fed cut rates in December?
About 9 in 10 economists polled by financial data firm FactSet are forecasting that the Fed will cut its benchmark rate by 0.25 percentage points on Wednesday.
If that occurs, the federal funds rate — the interest rate banks charge each other for short-term loans — will be lowered to a range of 4.25% to 4.5%, down from its current target range of 4.5% to 4.75%.
That would mark the Fed’s third consecutive rate cut this year, which kicked off with a jumbo 0.5 percentage point reduction in September, followed by a 0.25 percentage point cut at its November meeting.
How will another rate cut impact my money?
Any reduction in the federal funds rate could ease borrowing costs for millions of Americans. But a 0.25 percentage point cut isn’t likely to make that much of a difference, with LendingTree chief credit analyst Matt Schulz noting that it “may knock a dollar or two off your monthly debt payment.”
“Another rate cut is welcome news at the end of a chaotic year, but it ultimately doesn’t amount to much for those with debt,” Schulz said.
Still, new APR rates on credit cards have declined to 24.43% from 24.92% in September, according to LendingTree data. Loan rates for other products, such as home equity lines of credit, have also declined.
Despite the rate cuts, mortgage rates haven’t budged much and continue to hover near 20-year highs, leaving many would-be homebuyers disappointed. While the Fed’s benchmark rate influences home borrowing costs, mortgages are also impacted by broader economic trends and changes in the yield for the U.S. 10-year Treasury bond.
“Going forward, mortgage rates will likely continue to fluctuate on a week-to-week basis and it’s impossible to say for certain where they’ll end up,” LendingTree’s Channel said.
What’s going on with inflation and the economy?
Inflation, or the rate at which prices for goods and services change over time, has cooled since it reached a 40-year peak of 9.1% in June 2022.
The Fed began pushing its benchmark rate higher in 2022 in order to dampen economic demand and tame inflation. But while inflation has eased since its 2022 peak, prices for many products and services remain considerably higher than they were before the pandemic.
And prices are likely to stay high unless there’s a period of deflation, which typically only happens during a steep economic downturn, such as a recession.
That has left many Americans feeling financially tapped out, with millions taking their frustrations to the ballot box last month and voting for Trump’s economic vision of ending “the inflation nightmare.”
How might Trump’s economic plans impact the Fed?
While Trump has vowed to tackle rising prices, some of his policies could prove to be inflationary, according to Wall Street economists. For instance, Trump last month unveiled plans to place a 25% tariff on all imports from Mexico and Canada on his inauguration day, January 20.
The president-elect also said he intends to levy an additional 10% fee on all imports from China.
But tariffs are essentially consumption taxes that are most often paid by consumers. In other words, American shoppers could end up paying more for everything from avocados imported from Mexico to TV sets manufactured in China.
Because of the potential for inflation to tick higher in 2025 if Trump enacts widespread tariffs, many economists expect the Fed to slow or pause in its rate decisions next year in a wait-and-see approach.
“Fed officials might prefer to be cautious in light of uncertainty about the new administration’s policies, especially possible tariff increases,” noted Goldman Sachs economists in a Dec. 15 research report.
Will the Federal Reserve cut rates in 2025?
Economists are forecasting that the Fed will continue to cut rates next year, although some are scaling back the number of reductions they’ve penciled in.
The Fed will release its summary of economic projections (SEP) on Dec. 18, which will provide some insight into what the FOMC is expecting in 2025.
It’s possible the Fed’s outlook will forecast three rate cuts in 2025 of 0.25 percentage points each, down from four rate cuts the central bank had penciled in when it last released the SEP, in September, according to EY chief economist Gregory Daco in an email.
At his Wednesday press conference, Powell could “reiterate the familiar metaphor of moving slowly in a dark room full of objects to justify a potential rate cut ‘skip’ at the January meeting,” Daco added.
President-elect Donald Trump’s criminal conviction in state court remains on the books Monday, after a New York judge rejected an effort by Trump to have the case tossed based on a landmark Supreme Court ruling.
Justice Juan Merchan found that a July Supreme Court ruling granting Trump presidential immunity for official acts did not preclude a jury from finding him guilty after a criminal trial this spring.
Merchan wrote that evidence shown at trial pertained “entirely to unofficial conduct.”
This is a developing story and will be updated.
As unexplained drone sightings along the East Coast trigger investigations and demands from officials for more information, a wave of online speculation has filled the void as amateur sleuths seek to solve the mystery themselves.
One Facebook group called “New Jersey Mystery Drones – let’s solve it” has surged to over 73,000 members in recent days, becoming a hub for users to share their drone sightings and speculate on the source of the mysterious activity.
George Gary, a New Jersey resident who joined the Facebook group, told CBS News that he was sitting in his car in Moorestown when he saw what he said were “multiple drones” in the sky. “I’m honestly not sure what’s behind them,” he said, speculating that it could be connected to government activity. “I’m really curious to find out.”
New Jersey resident Vanessa Grierson, who also said she has seen drones, told CBS News she joined the Facebook group to find out what others were seeing. “It’s alarming that there are still no answers,” she said.
Across social media, users have shared theories that range from foreign interference to UFOs to hobbyist activity.
The FBI and Department of Homeland Security issued a joint statement last week saying there is “no evidence at this time” that the reported drone sightings pose a threat to national security or public safety, or have any foreign connection.
But state and local leaders have been pushing for more information and a stronger response.
New Jersey Gov. Phil Murphy said Sunday he is urging federal authorities to allocate more resources to investigate the sightings, while New York Gov. Kathy Hochul announced that a drone detection system is being deployed in the state.
In some cases, people mistake planes for drones
The number of drones flying over the East Coast and the identity of those behind the activity remain unclear. White House national security spokesperson John Kirby said Monday that the FBI has received about 5,000 tips of reported drone sightings in the last few weeks, “about 100 of which they felt needed to be followed up on.”
Authorities say many of the reported drone sightings could be aircraft or helicopters operating from the region’s numerous airports, as residents increasingly turn their attention to the skies in search of answers.
New Jersey Sen. Andy Kim said he went on patrol with police on Thursday night to find out more about the drones. In a lengthy X thread, Kim said he “concluded that most of the possible drone sightings that were pointed out to me were almost certainly planes.”
Kirby said many other reports were determined to be “a combination of lawful commercial drones, hobbyist drones and law enforcement drones.”
In addition, unrelated videos have sparked confusion. On Friday, a video was widely shared and said to show a mysterious drone seemingly “shooting” at the ground. However, CBS News traced the footage to a military training exercise at Joint Base McGuire-Dix-Lakehurst.
People have also shared old videos from different contexts. One widely shared clip, allegedly showing drones over New York, is at least four years old.
Officials respond
Rep. Mike Waltz, a Republican from Florida who is President-elect Donald Trump’s pick for national security adviser, said on “Face the Nation with Margaret Brennan” that the lack of information highlights lapses in authority between local law enforcement and federal agencies like the Department of Defense and Department of Homeland Security.
“I think Americans are finding it hard to believe we can’t figure out where these are coming from,” Waltz said. “It’s pointing to gaps in our capabilities and in our ability to clamp down on what’s going on here. And we need to get to the bottom of it.”
Democratic Sen. Cory Booker of New Jersey said there is a “growing sense of uncertainty and urgency across the state” despite statements from federal investigators assuring residents that the drones do not pose public safety threats.
“As such, I urge you to share any relevant information about these drone sightings with the public,” Booker said. “Without transparency, I believe that rumors, fear, and misinformation will continue to spread.”
Shooting down drones?
Some social media users have suggested that they plan to shoot down the drones if they veer too close to their homes. President-elect Trump also suggested shooting down the drones, though he did not clarify who should take such action.
However, shooting down a drone is a federal crime.
The Federal Aviation Administration classifies drones as aircraft, meaning damaging or destroying them is a violation of the Aircraft Sabotage Act.
Beyond legal risks, firing at drones poses a serious safety hazard and could lead to injuries.
Washington — President-elect Trump is meeting with TikTok CEO Shou Chew on Monday at his Mar-a-Lago estate, according to sources familiar with the meeting.
The news was first reported by CNN.
A spokesperson for TikTok did not immediately respond to a request for comment.
At a news conference earlier Monday, Trump had warm words about TikTok and its near-term future.
“We’ll take a look at TikTok. You know, I have a warm spot in my heart for TikTok, because I won youth by 34 points. And there are those that say that TikTok has something to do with that,” Trump said when asked about how he would stop a ban. Harris won 54% of voters under 30, but Trump made inroads.
During his first term in the White House, Trump tried to ban the app.
President Biden earlier this year signed into law a bill passed by Congress requiring TikTok and its Chinese parent company, ByteDance, face a Jan. 19 deadline to cut ties or be banned in the U.S. The companies have tried to delay the deadline pending a Supreme Court review, but a federal appeals court, which upheld the law, denied the request last week. The companies asked the Supreme Court on Monday to temporarily pause the law.
“A modest delay in enforcing the Act will create breathing room for this Court to conduct an orderly review and the new Administration to evaluate this matter — before this vital channel for Americans to communicate with their fellow citizens and the world is closed,” the emergency application said.
The filing asked the Supreme Court to make a decision on the request by Jan. 6 so ByteDance and TikTok can “coordinate with their service providers to perform the complex task of shutting down the TikTok platform only in the United States” if the justices decline.
A 90-day extension could be granted if a sale is in process by the deadline. But TikTok has argued that a sale is unfeasible and the Chinese government opposes the sale of the algorithm which powers the app.
