--- title: The Fed Is Holding Interest Rates Steady, but Cuts Are Coming Soon description: The Federal Reserve has decided to hold interest rates steady, but the consensus holds that a rate cut is coming in September. authors: - name: Adam Hardy role: Lead Data Reporter url: https://money.com/author/adam-hardy/ bio: Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. Adam’s work has also appeared in Business Insider, Forbes, Nasdaq, The Penny Hoarder, Yahoo! Finance and more than a dozen local and regional newspapers. education: University of South Florida, BA, Magazine Journalism at_money_since: 2021 articles: 501 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - The Penny Hoarder - Forbes Advisor - Creative Loafing - The New York Times - The Washington Post - Bloomberg - Harvard Law School - The Federal Register - National Consumer Law Center - CBS News - Becker's Hospital Review - Business Insider - Mother Jones - The Week - Fortune - The Philadelphia Inquirer - National Association of Student Financial Aid Administrators (NAFSAA) - Education Advisory Board (EAB) - The Institute for College Access & Success (TICAS) - This Morning with Gordon Deal - Empower - Reddit social: - https://www.x.com/hardyjournalism - https://www.linkedin.com/in/hardyjournalism/ editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2024-07-31T19:20:30.000Z' modified: '2024-07-31T19:20:30.000Z' section: Economy and Politics tags: - News word_count: 848 canonical: https://money.com/fed-interest-rates-cuts-coming-september/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![A magnifying glass showing the United States Federal Reserve emblem with a graph in the background](https://img.money.com/2024/07/News-Fed-Rate-Decision.jpg) The Federal Reserve has decided to hold interest rates steady, as broadly expected, but the consensus holds that rate cuts are coming in September. At the conclusion of the Federal Open Market Committee, aka FOMC, meetings Wednesday, the Fed confirmed what investors and analysts almost unanimously anticipated: Interest rates are staying put at the current 5.25% to 5.5% range. While inflation has showed signs of moving toward the Fed's preferred rate of 2%, the committee wrote in a [statement](https://www.federalreserve.gov/newsevents/pressreleases/monetary20240731a.htm) Wednesday that it would like to see "further progress" toward that objective before lowering rates. "Inflation has eased notably over the past two years, but remains somewhat above our longer-running goal," Fed Chair Jerome Powell said at a press conference Wednesday. "We're not quite at that point yet." In a bid to tame rapidly rising prices, the Fed began hiking interest rates in March 2022, when rates were at historically low levels. The central banking system then raised rates 11 times, bringing them to a 20-year high. Since August 2023, interest rates have held steady at the current range. For consumers fed up with the elevated cost of borrowing, the Fed’s decision Wednesday comes as bad news. According to [Morning Consult](https://pro.morningconsult.com/analysis/inflation-interest-rates-cut-2024), 68% of Americans say interest rates are too high. Many of them are cutting back spending on essential items and delaying major purchases like cars and homes as a result. However, the Fed is wary of cutting interest rates too soon, as it did the last time the U.S. economy dealt with soaring inflation. Back in the ‘70s and ‘80s, the Fed hiked and then cut rates quickly, and [inflation came back with a vengeance](https://money.com/how-bad-is-inflation-under-joe-biden/), soaring as high as 13.5%. Some are beginning to worry the Fed may be over-correcting as a result. "Continuing to keep rates elevated could be harmful for consumers and the economy as a whole, which is already showing signs of cooling," Sofia Baig, economist at Morning Consult, said in a statement shared with Money. ## When will the Fed cut interest rates? At a press conference Wednesday, Powell signaled that an interest rate cut is coming "as soon as the next meeting" if inflation continues cooling and the labor market remains stable. The central bankers next gather for the FOMC in September. Analysts have been predicting that a [rate cut at the September meeting is a given](https://money.com/fed-interest-rate-cuts-september-predictions/). According to [CME FedWatch](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html), markets are already pricing in a 100% probability of a September rate cut — the main question is by how much. Investors are mostly expecting a 0.25 percentage point reduction, though about 10% of them are pricing in a 0.5 percentage point cut. The Fed will be closely eyeing inflation and jobs data between now and September to determine whether to cut and by how much. If inflation continues to cool while the job market holds steady, the cut is more likely to be by a quarter percentage point; though if the job market falters in the meantime and unemployment rises, the cut could deepen to a half percentage point. ## What does the Fed’s decision mean for your wallet? The Fed’s decision to hold rates steady means consumers must weather high interest rates for at least a little longer. For folks who are primarily building their nest egg, that could be a good thing. Interest rates remaining steady mean [larger yields on certificates of deposit](https://money.com/cd-rates-falling-2024/), [high-yield savings accounts](https://money.com/best-high-yield-savings-accounts/) and other similar accounts. On the other hand, borrowers will continue to face [record-high mortgage](https://money.com/young-homebuyers-challenges-affordability/) and [credit card payments](https://money.com/credit-card-debt-record/). Elevated interest rates — which translate into [mortgage rates near 7%](https://money.com/current-mortgage-rates/) — have ground the housing market to a near halt. Homebuyers looking for some relief from steep mortgage rates likely won't find any until the fall. Benchmark interest rates affect all kinds of other areas of household finances, too, including the annual percentage rates (APRs) on [home-equity loans](https://money.com/best-home-equity-loans/), [personal loans](https://money.com/best-personal-loans/), [student loans](https://money.com/student-loans/) and more. When interest rates are reduced, consumers are likely to first see the effects on their savings accounts and variable-interest debt payments such as [home-equity lines of credit (HELOC)](https://money.com/best-home-equity-loans/) or [credit cards](https://money.com/best-credit-cards/). Lower interest rates also have implications for the stock market. According to the financial firm [Morningstar](https://www.morningstar.com/lp/diversification-landscape), the two are closely related. Generally speaking, when interest rates are high, stocks are seen as riskier, and investors tend to allocate more of their portfolios into safer options such as bonds. The opposite also tends to be true: When interest rates fall — or are expected to fall — investors may move money back into stocks. For what it's worth, the stock market has had a particularly strong performance on Wednesday, with the Dow, [S&P](https://money.com/what-is-the-sp-500-index/) and Nasdaq indexes up more than 1%, 2% and 3%, respectively. As the stock market adjusts to potentially lower rates, [analysts at U.S. Bank](https://www.usbank.com/investing/financial-perspectives/market-news/how-do-rising-interest-rates-affect-the-stock-market.html) had this advice for investors: “Be prepared for potential stock price fluctuations in the near term.” ## Compare CD Rates ![See Offer](https://s3.consumersadvocate.org/prd/image/image/36133/medium_540498b7-511a-4fa5-8824-09ca78d750b2.webp) Our Partner [See Offer](https://money.com/go/4dd6429c550d?bidid=4114101163&pmeta=p129-c636-u27475&ptid=670702312&ptoken=4d83a4e1111898c15c056cc5c868a92b) ![See Offer](https://s3.consumersadvocate.org/prd/image/image/40323/medium_d7cfad4d-110c-4c10-97f2-3dd8f2fbfc6b.webp) Our Partner [See Offer](https://money.com/go/a95fc0b2a559?bidid=4114101171&pmeta=p129-c636-u27475&ptid=670702312&ptoken=409e3b3546b3a07bedf03ce3ce363635) ![See Offer](https://s3.consumersadvocate.org/prd/image/image/20230/medium_6b3cc222-da4e-4595-9a8d-5f1af12cdbb1.png) Our Partner [See Offer](https://money.com/go/0c5122cbd09f?bidid=4114101168&pmeta=p129-c636-u27475&ptid=670702312&ptoken=dc55344d7353baff30cbd13453b7fb7d) ## You can start managing all your college expenses today ![](https://s3.consumersadvocate.org/prd/image/image/2744/large_4e96eeb3-df7c-45bc-bb0d-0956ad7d2851.webp) [LEARN MORE](https://money.com/pr/y389f0da96bd?ap_referrer=%2Ffed-interest-rates-cuts-coming-september%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/fed-interest-rates-cuts-coming-september/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Federal Reserve", "item": "https://money.com/federal-reserve/" }, { "@type": "ListItem", "position": 4, "name": "The Fed Is Holding Interest Rates Steady, but Cuts Are Coming Soon" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/fed-interest-rates-cuts-coming-september/#webpage", "url": "https://money.com/fed-interest-rates-cuts-coming-september/", "name": "The Fed Is Holding Interest Rates Steady, but Cuts Are Coming Soon", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-07-31T19:20:30.000Z", "mainEntity": { "@id": "https://money.com/fed-interest-rates-cuts-coming-september/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/fed-interest-rates-cuts-coming-september/#breadcrumb" }, "dateModified": "2024-07-31T19:20:30.000Z" }, { "@type": "NewsArticle", "headline": "The Fed Is Holding Interest Rates Steady, but Cuts Are Coming Soon", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/07/News-Fed-Rate-Decision.jpg", "width": 2880, "height": 1920, "caption": "News-Fed-Rate-Decision" } ], "author": [ { "@type": "Person", "name": "Adam Hardy", "url": "https://money.com/author/adam-hardy/", "@id": "https://money.com/author/adam-hardy/#author", "description": "Adam Hardy is a lead data journalist at Money, where he frequently reports on financial barriers that affect low-income Americans. 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