Fed cut interest rates by a half point
A big day! The Fed cut interest rates by a half point, the first cut since 2020. A welcome surprise, since a lesser cut was expected. In more good news, this process of rate cutting will continue through 2026. The consensus among Fed officials is that they will do two more 25 basis point cuts this year and four more cuts next year and an additional two (2) more cuts in 2026. One year ago, a 30-Year Fixed Rate was a whopping 7.18% and now as of September 12, 2024, a 30-Year Fixed Rate is down to 6.2%.
This decision to cut rates by the Fed is primarily due to the concern of a slowing labor market, as the unemployment rate continues to tick upwards of 4.0%. The jobs created in June, July, and August are well below the average monthly gain over the previous 12 months.
But also, there is confidence that inflation is trending down to the 2% sustainable target which also factors into the decision to cut rates by a whole half point.