It has been two weeks since the Federal Reserve decided to cut its main interest rate for the first time since 2020, during the Covid-19 pandemic.
This decision is to lower the Federal Reserve Funds Rate to 4.75% to 5% from 5.25% to 5.5%, the level that has been used since summer 2023.
The hope is that progress in lowering inflation will bring interest rates down for all, helping businesses that depend on the cost of credit, home buyers, home sellers and others. This week, most Federal Reserve policymakers, including Chairman Jerome Powell, have and will give hints in their speeches about what's to come.
Jerome Powell, in a speech to the National Association for Business Economics on Monday. Powell said he sees two more rate cuts in 2024 of 0.25 percentage points at the November and December meetings. He said that the economy is in good condition. Greater reductions are not needed, he said.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said he expected rates to drop by half a point in November if job growth showed signs of slowing more than expected. Otherwise, he feels a quarter-point reduction would be more appropriate in a campaign that would lower the Federal Reserve Funds Rate to 3% to 3.25% by the end of 2025. This would likely translate to mortgage rates well below 6%.
Michelle Bowman, Fed Governor, spoke on Monday, September 30, at the Georgia Bankers Association meeting in Charleston, S.C. Bowman was the only one who disagreed with the rate cut decision at the September 18 meeting. He objected to the half-point reduction, considering it too large and could trigger new inflationary pressures. However, he supported a rate cut given the Fed's success in reducing domestic inflation.
Thomas Barkin, president of the Federal Reserve Bank of Richmond, at the WilmingtonBiz 2024 Conference and Expo in North Carolina said he was initially slow to agree to a rate cut. However, he supported the rate reduction decision in September. He will likely give his views on the dock workers strike on the East and Gulf Coasts and how long it will take for the southeastern US to recover from the damage caused by Hurricane Helene.
