December 13, 2023
That was the Federal Reserve chairman who just as you heard said the Federal Reserve is likely not going to be raising interest rates anymore. We have hit the peak.
That means the interest rate will stay the same at 5.25%-5.5% – at least for the next six weeks. But that’s not all chair Jerome Powell said today. He confirmed the Federal Reserve is thinking based on how they believe the economy has reacted to the dramatic increase in interest rates and how it will likely behave in the coming years – they could cut the interest rates three times in 2024, four times in 2025 and then ultimately get the interest rate below 3% by the end of 2026.
For those of you struggling with these high interest rates…trying to get into a home or trying to get a loan — that’s probably some welcome news. So why is this happening and how will the fed handle interest rates in the future. Here’s the chairman.
Raising interest rates 11 times since March of 2022 has obviously slowed down the economy and decreased inflation from its peak in June of 2022 of 9.1%. And that was the Fed’s goldilocks goal – to achieve the so-called “soft landing” where inflation would come down without triggering a recession. Now – the Fed chair says we’re never out of the woods when it comes to a recession – but as of today – we’re nowhere near one.
And lastly – I want to reiterate something I’ve said many times in the past. And it’s specifically for those of you who keep saying oh they’re cutting the rates because it’s an election year. First of all – that makes no sense because during the midterm elections in 2022 – the fed was in the midst of a enormous interest rate hike – jacking it up the rate by several points. And also the fact is — while the Federal Reserve is a government agency it is a non-political independent agency. The Federal Reserve board does not have to get approval from the President or Congress to hike *or cut interest rates. They do what they want. But if you want to be technical – Jerome Powell the chairman of the Federal Reserve was appointed by former President Trump and President Biden decided to keep him on. Regardless – the Fed chair was asked today how the 2024 election may or may not play a role in what’s going to happen with interest rates next year.
Read the Federal Reserve announcement about interest rates here.
Read the Federal Reserve projections for 2024 here.
