Fed likely to cut interest rates in September

Diese caption 😀

"ECB President, Christine Lagarde with someone who looks very like the Fed's Jay Powell. But isn't."

ING THINK: We’re still playing the central bank waiting game https://t.co/vEZvTFMQ6k pic.twitter.com/e477cYXjCr

— Heike Lehner (@heikelehner) July 16, 2024

The Bureau of Labor Statistics reported that annual inflation in the United States fell to 3% in June, as measured by the Consumer Price Index. This development has raised the possibility of interest rate cuts by the Federal Reserve as early as September. Economic analysts suggest that the Federal Reserve considers various economic indicators, not just inflation, when deciding on interest rate adjustments. Lower interest rates could stimulate economic growth by making borrowing cheaper for consumers and businesses. However, the Federal Reserve also weighs the risk of reigniting inflation if rates are cut too aggressively.

From Bloomberg on today's remarks by #FederalReserve Chair Jay Powell:

“The #Fed chief also cemented a shift in tone among some central bank officials toward emphasizing potential risks to the labor market, alongside their continued focus on lowering #inflation. 
“Now that…

— Mohamed A. El-Erian (@elerianm) July 15, 2024

With a fall rate cut looking more likely, households may finally get some relief from the high borrowing costs that followed recent interest rate hikes. Here are three key strategies to consider:

The market is now pricing in a 94% probability of a Fed rate cut in September.

In every single FOMC meeting since 2009 the Fed has done exactly what the market was pricing in entering the meeting.

Unless the odds change, a cut is coming.

Video: https://t.co/vegt4koY8G pic.twitter.com/4GdRzJxLBh

— Charlie Bilello (@charliebilello) July 15, 2024

1.

The current inflation level of 3% is a far cry from what it was in 2021&2022. Since inflation has been coming down & becoming more manageable, long awaited interest rate cuts could be right around the corner. Here’s what that means for your wallet. #Velshihttps://t.co/5MviEe5iC7

— Ali Velshi (@AliVelshi) July 13, 2024

Watch your variable-rate debt: Interest rates on adjustable-rate mortgages, some private student loans, and credit cards are likely to decrease, reducing monthly payments. 2. Lock in savings rates: Rates on online savings accounts, money market accounts, and certificates of deposit are poised to go down.

Fed considers September rate cut

Experts suggest locking in some of the highest returns now. 3. Put off large purchases: If you’re planning a major purchase, like a home or car, it may be beneficial to wait for lower interest rates to save money over the life of the loan. Wall Street’s expectations for a September rate cut rose to roughly 93% on Thursday from 73% the day before, according to the CME FedWatch Tool. BNP Paribas economists updated their base case to reflect a rate cut in September, citing the mix of June inflation and jobs data. They expect two quarter-point cuts in 2024. Fed Chair Jerome Powell acknowledged that inflation has moderated and that the labor market is “strong, but not overheated,” marking a departure from just a few months ago when inflation showed signs of reaccelerating and the jobs market remained red-hot. The Consumer Price Index dropped 0.1% from May, which helped to slow the annual rate of inflation to 3% from 3.3% in May. Falling gas prices, as well as a drop in new and used car prices, contributed to the first month-on-month decline since May 2020. Fast-food chains nationwide have recently unveiled value menus in response to rising prices turning customers off. However, the value in these meals might not be as great as it seems, as customers might still be paying the going rate or more for these “value” offerings, despite the prices for key ingredients coming down.