This left the current range at 5.25% to 5.5%, marking the highest level in 22 years. Inflation is a generalized rise in prices, affecting different goods and services throughout the economy, such as gas, rent and food. The 3% level would also be significant, in putting rates back to where they were more than a decade ago back in 2008, since immediately before the pandemic, rates never quite hit the 3% level. Hence the period of easy money that has persisted in America for many years may appear to be over if the November meeting goes as planned. A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor’s Business Daily, among other publications.
Did the Fed Raise Interest Rates in July 2024?
As a senior writer at AOL’s DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities. There were four rate increases in 2023, occurring at the February, March, May, and July FOMC meetings. During the most recent FOMC meeting held on July 30-31, 2024, interest rates were kept unchanged at 5.25%-5.50%.
Federal Open Market Committee
However, the actual inversion would likely occur in the lead up to the meeting as shorter term rates factor in a likely rate move, and assume no big shift at the longer end of the yield curve. Then the Fed plans to skip the month of October before setting rates in early November. Here as we move further out, the decision is a little more uncertain, though similar to the September meeting a 50bps or 75bps hike appear the most likely outcomes, based on market futures. Rates had been hovering near zero during the pandemic and then were raised by 0.25 percentage point starting in March 2022.
When is the next Fed meeting?
The Fed will also monitor credit conditions, the financial markets, and global developments closely. The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System, the central bank of the United States. The FOMC holds eight regularly scheduled meetings during the year and may hold other meetings as needed to set emergency short-term interest rates or implement other policy tools. The FOMC serves as the monetary policy-making arm of the Federal Reserve System, and its decisions have far-reaching implications for the U.S. economy. Meeting eight times a year, and occasionally more if the situation demands, the FOMC deliberates on the nation’s interest rates and other financial policies.
- Market expectations are currently broadly split between a 50bps and 75bps hike, with an outside chance of a 100bps move.
- The Fed had raised rates almost a dozen times since early 2022-’23 to cool the U.S. economy and battle inflation rates that peaked at more than 9% last year.
- The goal, at that time, was to make borrowing more expensive to cool down the economy and surging inflation.
- The Fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the U.S. dollar.
- The trick is to moderate inflation without sending the economy into a recession, what economists call a “soft landing.”
Committee membership changes at the first regularly scheduled meeting of the year. Then the last scheduled meeting of the year in mid-December is expected to see a smaller hike. The market sees some chance that either inflation as softened or the economy has weakened sufficiently by December that the Fed holds rates steady at this meeting.
The Federal Reserve will hold its next policy meeting on September 17-18, 2024, and analysts had initially expected the central bank to continue to hold rates steady. This was quite expected, as it gives the Fed additional time to evaluate if the current rates keep inflation at bay without hampering economic growth too much. This is a change in language from the meetings held toward the end of 2023 when the FOMC had signaled that at least three rate cuts could be in the cards for 2024. Indeed, the Fed has indicated that inflation remains a key concern, and government reports show the pace of inflation remains stubbornly high. Market expectations going into the May meeting were, therefore, somewhat muted that the Fed would cut. The Fed aims to achieve a soft landing for the U.S. economy while balancing its dual mandate of maximum employment and price stability.
There is a chance that the Fed remains on its path of raising rates by this meeting. However, the market sees the chance of that as fairly small, both in terms of the chance of a hike and its size, which could be around the more typical 25bps moves the Fed has made historically. The Fed lifts rates to raise the cost of borrowing for businesses and shoppers. The goal is to curb borrowing, cool off an overheated economy and fend off inflation spikes.
These decisions influence everything from the rates you get on your savings account to the cost of borrowing for homes and businesses. The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed. The minutes of regularly scheduled meetings are released three weeks after the date of the policy decision.
The Fed reported that the American economy remains strong and the labor market resilient–but also acknowledged that the pace of growth had slowed down compared to 2023. Another increase came in May 2022, this time by 0.50 percentage point, followed by 0.75 percentage point hikes for four consecutive meetings. The Fed ended 2022 with a 0.50 percentage point hike before approving three quarter-point increases so far this year. That blockbuster May jobs report could scuttle the Fed’s plan to pause rate hikes this week. At the Fed’s July meeting, interest rates were bumped up 0.25 percentage points.
He has previously served as Chief Investment Officer at Moola and FutureAdvisor, both are consumer investment startups that were subsequently acquired by S&P 500 firms. He has published two books and is a CFA Charterholder and educated at Oxford and Northwestern. From “What is inflation?” to “What is a recession?” to “How to enroll in Zelle?” – we’re striving to find answers to the most common questions you ask every day. Earlier this month, Federal Reserve Chair Jerome Powell told Congress, “I’m today not going to be sending any signal about the timing of future action,” regarding lower interest rates.
The Fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the U.S. dollar. Some have even speculated that if recent market action is indicative of a looming economic downturn, more broadly, then an emergency rate cut may come even sooner. 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. It is impossible to predict exactly what the Federal Reserve will decide during its next meetings, but the wording of the Fed’s announcement indicated a wait-and-see approach.
At the time of this writing, futures markets assign more than a 90% probability that there will be a rate cut September 2024 meeting, along with almost a sure thing that there will be additional rate cuts by the end of the year. The Federal Reserve’s September meeting was the second meeting without a federal funds rate raise since March 2022. The central bank is keeping rates higher for longer, which may mean fewer rate cuts next year. This has left it as a range of 5.25% to 5.5%, which is the highest level in 22 years. Of course, this will all depend on the trajectory of inflation and the state of the economy. The Fed’s policy moves ultimately depend on what economic data show in the coming weeks, including measures of inflation, employment, and productivity.
With three remaining meetings on the calendar for 2022, here’s what the market currently expects. Another key trend is hiring, which accelerated in May as employers added a booming 339,000 jobs, much more than economists expected. It was another sign that the job market has been remarkably sturdy despite the Fed’s aggressive hikes aimed at tamping down hiring and wage growth, a key driver of inflation. The market seems to believe that rates are likely to hold steady at this meeting, with a balance of risks between inflation continuing to be a concern and the economic environment moving closer to, or possibly well into, a recession. However, the most likely move in the market’s view is perhaps a 25bps move up in rates.
This is where the markets believe that recession risks may prevent the Fed from moving too strongly against inflation. Or, in a more optimistic interpretation, maybe inflation will be trending lower without too much economic weakness, thought that seems less probable. However, if signs of recession mount and inflation trends down, then the Fed may moderate any increase. However, currently the question for this meeting is the size of a rate hike, rather than the direction the Fed will move in. This meeting will also see some greater disclosure from the Fed including the latest economic projections as occurs at every other Fed meeting. Market expectations are currently broadly split between a 50bps and 75bps hike, with an outside chance of a 100bps move.
The Fed had raised rates almost a dozen times since early 2022-’23 to cool the U.S. economy and battle inflation rates that peaked at more than 9% last year. The Fed’s rate-hiking campaign has been the most aggressive since the 1980s, and it sparked some turmoil in the banking sector, the stock market, and the global economy. The Fed has held rates steady at 5.25%-5.50% already for several months, which has provided some relief for a strained banking sector and stock market. Experts predict that the Fed will shift to rate cuts—although the extent to which they do will depend on economic conditions in the coming weeks and months.
Economists also indicate that even without big Fed rate increasesinflation has slowed as supply-chain bottlenecks ease, commodity prices fall, a strong dollar lowers import costs and retailers offer discounts to unload swollen inventories. Although economists as a group have become more optimistic about the path of the economy, surveys show they still put the odds of a recession hitting in the next 12 months at about 40%. The bond market is awash in inverted yield curves, for one thing, and that’s not very reassuring at all. The New York Fed’s yield-curve model gives a 56% probability to the U.S. entering a recession over the next 12 months. Of course, the Fed can always move rates outside of its scheduled meetings, though that’s often only done when the economic news is extreme.
If inflation trends higher from its current 9% level and the job market remains robust, then a 75bps move, or greater, is more likely. The FOMC chair typically holds a press conference after four of the eight meetings each year, where the chair explains the policy decision and answers questions from journalists. The minutes of each meeting are released three weeks after the date of the policy decision.