The Federal Open Market Committee has not cut interest rates in 2024, despite initial predictions that they would. The job market has remained strong, prompting the FOMC to wait and see how inflation data trends before making any rate cuts. Interest rates currently stand at 5.25% to 5.5%, with markets anticipating one or two rate cuts later in the year.
The lack of progress in lowering inflation in 2024 has led to a delay in interest rate cuts. The first quarter of 2024 showed little improvement in inflation, with the next Consumer Price Index report due on May 15. Federal Reserve Chair Jerome Powell noted the strength of the labor market in April and emphasized the need for patience in letting restrictive policies work.
At the FOMC’s last update in March, most policymakers expected two or three interest rate cuts in 2024. However, the tone of recent FOMC statements suggests that fewer cuts may be projected in the upcoming meeting on June 12. Markets anticipate interest rates to be held steady in June, leaving potential adjustments in September and December.
Thirty-year mortgage rates have nudged up to over 7% in April 2024, reflecting the Fed’s decision to keep rates higher for longer. Mortgage rates have been on an upward trend since early 2022, with the FOMC’s actions playing a crucial role in determining the neutral interest rate level. If the FOMC cuts rates sooner and more aggressively, mortgage costs could decrease.
Despite delays in interest rate cuts, markets still expect one or two cuts in 2024. This means that interest rates are likely to remain elevated throughout the year. The FOMC’s decisions on interest rates will continue to impact the job market, inflation, and mortgage rates, shaping the economic landscape for the remainder of the year.
