August 2, 2024
The Federal Reserve has just decided to pause interest rates again. But we also got some indications that rates will start to come down soon.
For now that means rates will stay at the highest level we’ve seen in almost 20 years…. 5.25% to 5.5% We’ve been sitting at that rate for about a year. That of course makes borrowing more expensive for business owners and all of us. For folks like us those higher rates means higher new mortgage rates higher credit card rates and more expensive new car loans among other things.
So what indications does the fed see that would cause them to start cutting rates? Well I’ve been telling you in several videos. The labor market is finally starting to cool off, inflation numbers are coming down and experts say the housing market isn’t showing signs of any more dramatic heating. All that plays into a cooling economy overall and more of a chance we can hit the Fed’s target inflation rate of 2% sooner rather than later. The most recent reading has inflation at 3%.
Now the Fed won’t flat out say *when interest rates will be cut. All they say is whether or not they have confidence inflation can reach that 2 percent goal. For the last year the fed chair has been saying they need to see more data to feel confident. Well it looks like this new data will be giving the fed the confidence it needs to cut rates as soon as September as long as the economy stays on track.
