Why the Fed Might Actually Raise Interest Rates Again Before Cutting Them
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Interest rate cuts are top of mind around the country, for good reason. It's widely expected that the Federal Reserve will begin slashing rates later this year, and among the likely benefits will be cheaper mortgages, lower credit card APRs and a juiced stock market.
But what if these expectations are wrong? What if the Fed decides to raise rates once again before bringing them back down?
The implications of interest rate changes are major for the American economy. The Fed is performing a delicate balancing act. In March 2022, the central bank began what would become a 17-month series of interest rate increases to tamp down on inflation, before pausing the hikes in July 2023. Now, the Fed is trying to balance inflation and interest rates as carefully as possible to avoid recession.
Most experts expect the next Fed move to be a rate cut. But it might be wise to prepare for one more rate increase before that, according to one Fed official.
