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USA TODAY
When's the next Federal Reserve meeting? Here's when to expect updates on current rate.
By Olivia Munson, USA TODAY,
4 hours ago
The Federal Reserve's benchmark, short-term rate has held a 23-year high of 5.25% to 5.5% since July 2023. This pause follows aggressive rate hikes dating back to March 2022, a period in which the central bank raised rates 11 times. The goal, at that time, was to make borrowing more expensive to cool down the economy and surging inflation.
After raising its key interest rate for nearly two years to tamp down growth and rising prices, economists expected the Fed to cut the rate to bring it more in line with slowing inflation. However, estimates have been scaled back with most rate cut predictions shifting to two, one or none after inflation accelerated early this year.
But is a rate cut incoming? Following July's meeting, Federal Reserve Chair Jerome Powell said , "The economy is moving closer to the point where it will be appropriate to reduce our policy rate. That time is drawing near. That time could be in September if the data support that."
To control inflation, one of the Fed's main tools is the federal funds rate, which is the rate banks charge each other for overnight loans. If that rate rises, banks generally pass on their additional cost.
Even though the Fed does not directly control all interest rates in the country, when it raises the fed funds rate, other interest rates eventually follow, including adjustable-rate mortgages, credit cards, home equity lines of credit, and other loans.
It can be caused by several factors, such as more people spending money on goods or services that are not readily available to meet that demand. That allows producers and service providers to raise prices without worrying about a significant loss in sales.
Inflation also could be caused by a shortage of supply. If there are not enough goods to meet the demand for a good or service, this could lead to an increase in a manufacturer's or retailer's wholesale costs, which, in turn, would be passed along to consumers through higher retail prices.
Of course they are going to drop interest rates - it’s right before the election -. Kind of like gas prices dropping right before the election. I know it’s just a coincident!
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