The Federal Reserve is expected to make its third consecutive interest rate cut this week, according to economists polled by financial data firm FactSet. The decision will be made on December 17-18, and the central bank’s benchmark rate is likely to decrease by 0.25 percentage points to a range of 4.25% to 4.5%.
The Fed has been battling inflation since March 2022, when it began raising rates to cool the economy. While inflation has moderated considerably since then, the Consumer Price Index rose 2.7% in November, outpacing the Fed’s goal of driving down inflation to a 2% annual rate.
President-elect Donald Trump’s proposed economic policies could also impact the Fed’s decision-making process. Some of his plans, such as placing tariffs on imports from Mexico and Canada, could prove to be inflationary and lead to a slower pace of rate cuts in 2025.
Despite this, economists are still forecasting that the Fed will continue to cut rates next year, although some are scaling back their expectations. The Fed’s benchmark rate is expected to decrease by 0.25 percentage points each time, with a total of three rate cuts penciled in for 2025.
A reduction in the federal funds rate could ease borrowing costs for millions of Americans, but it may not make a significant difference for those with debt. New APR rates on credit cards have declined to 24.43%, and loan rates for other products have also decreased. However, mortgage rates remain near 20-year highs, leaving many would-be homebuyers disappointed.
The Fed’s decision is expected to be announced on December 18 at 2 p.m. ET, followed by a press conference with Federal Reserve Chair Jerome Powell.
Source: https://www.cbsnews.com/news/federal-reserve-meeting-rate-cut-interest-rates-december