FED Meeting June 2024: Why The Interest Rate Cuts Might Not Happen At All?

Interest rates are the discussion in every other individual’s mouth as they affect day-to-day life, impacting the way of living for every individual. The term interest is the additional amount a person pays other than a loan when he borrows money. It is also the amount the banks offer for keeping your money deposited in their care as a part of their schemes. But who decides these Interest rates? The decision on interest rates and many economy-related decisions like Inflation, which is the rate at which the price of goods and services changes, are taken by the Federal Reserve System in the US by forming FED meeting.

One of those FED meetings is happening right now and is on the second and final day of the schedule. It is the most awaited event for commoners and investors as this can impact their finances heavily.

FED Meeting History & Expectation

Federal Reserve System, which is famous by the term “FED” is the central bank of the United States, established in 1913 to regulate Financial institutions. The FED organizes eight Federal Open Market Committee (FOMC) meetings to discuss and make decisions on monetary policies and interest rates.

Earlier at the beginning of the year, FED expressed their vision to bring the inflation rate down to 2% by the year’s end, and to do they will introduce interest rate cuts within this year. As of now, the US inflation rate is around 3.4%, which is decent and much better than the alarming rate of 9% in June 2022.

The idea of interest rate deduction seems more prominent as the European Central Bank and the Bank of Canada have already presented similar cuts. The officials might or might not go for the same in today’s FED Meeting.

Will Interest Cuts Happen In This June FED Meeting?

The current Fed (interest) rate is 5.25% to 5.50%, making borrowing difficult. It is the highest level in the past 23 years and has been constant for almost a year now. The chances of the Interest rate staying the same are higher than any other possibility.

Micheal Feroli, the Chief U.S. Economist at J. P. Morgan, earlier said that the US economy is on the right track.

At the press conference, we expect Chair Powell will express confidence that the economy is still on the right path and that the FOMC can be patient in gaining confidence that inflation is heading toward two percent

Additionally, the date of increased employment the previous month indicates a positive effect on the current interest rate. The labor department has created 297,000 new jobs, but it is also important to note that the employment rate is still at 4, which is on the lower side. It is because the jobs created were more on the side of part-time than offering full-time opportunities.

The inflation rate will stay constant for now or might drop, but the chances of an increase are low. Many top analysts also believe the same and have a positive opinion on its impact on the finance industry. As per analysts, as long as the economy stays the same, the inflation rates will not impact the financial market.

Overall, no Interest rate deduction will happen in this June FED meeting. The authorities might announce the schedule of these deductions.

Interest Rate Cuts Might Not Happen At All

Many famous finance strategists like Lance Roberts have spoken on the possibility of seeing no cut rates at all, as the economy is doing just fine now.  Moreover, there is no actual proof that the “Inflation is Moderaring as fast as they would like.”

However, on the other hand, the FED meeting has spoken of three cut rates, after much discussion. If, despite the odds, such an interest rate deduction occurs, the first cut might happen around September, not any time before that. Moreover, the two other cuts can be expected for November and December to bring the interest rates closer to the 2% target.

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