FED Rate Cut Expectations: What 25bps Could Mean for You

Published by

Vignesh S G

December 18, 2024

Today marks the US Federal Reserve’s final meeting for 2024, with key announcements expected. A 25 basis point interest rate cut is widely anticipated, which could have a big impact on the economy. Let’s take a closer look at what this potential decision means.

US Fed Expected to Cut Rates Again

Kalshi data suggests there is at least a 96% chance that the Federal Reserve will announce a 25 basis point rate cut today. If confirmed, this will be the third rate cut of 2024, bringing the total reductions for the year to 100 basis points.

Rising Inflation Challenges the Fed

Despite the rate cuts, inflation has been climbing steadily in recent months, making the Fed’s job of stabilizing the economy more difficult. The US Consumer Price Index (CPI), which was 308.417 points in January, increased to 313.55 points in April. It reached its yearly peak of 315.66 points in October before slightly falling to 315.49 points in November.

The Producer Price Index (PPI) also showed an upward trend. From 142.683 points in January, it grew to 144.834 points by June and continued rising, hitting 146.493 points in November.

The Personal Consumption Expenditure (PCE) price index saw similar growth. It started at 122.115 points in January, surged to 124.266 points in October, and followed a steady upward trajectory throughout the year.

Job Market Weakens

A weakening job market has played a major role in the Fed’s considerations. While the job market showed improvement earlier in the year, recent data suggests a slowdown.

Initial jobless claims, which were at 224,000 on November 30, rose to 242,000 in the first week of December—matching levels seen at least eight weeks earlier.

Continuing jobless claims also increased, from 1.87 million on November 23 to 1.89 million by November 30.

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What to Expect for 2025

As the Federal Reserve looks to 2025, a new administration will take office in the White House. One of the new government’s biggest challenges will be balancing inflation control with economic growth. This will likely influence future Fed policies, making the upcoming year critical for the economy.

FAQs

When Will the Fed Announce the Rate Cut?

The Fed is expected to announce a 25 basis points rate cut today, December 18, 2024, after their final meeting of the year.

When is the Fed meeting in December?

The US Fed’s final meeting for 2024 is held today, December 18, with key announcements on interest rates expected afterward.

When is the next FOMC meeting

The next FOMC meeting after December 2024 will take place in January 2025, following the new administration’s assumption of office.

Vignesh S G

Vignesh is a young journalist with a decade of experience. A proud alumnus of IIJNM, Bengaluru, he spent six years as a Sub-Editor for a leading business magazine, published from Kerala. His interest in futuristic technologies took him to a US-based software company specialising in Web3, Blockchain and AI. This stint inspired him to view the future of journalism through the lens of next generation technologies. Now, he covers the crypto scene for Coinpedia, uncovering a vibrant new world where technology and journalism converge.