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5 Expectations for Fed Rate Decreases in 2024

Jul 18, 2024

The Federal Reserve's monetary policies are always a topic of great interest, particularly when it comes to adjustments in the federal funds rate. As we approach the latter half of 2024, here's what you need to know about potential rate decreases and how expectations have evolved over the year.


1. Current Federal Funds Rate

Since July 2023, the federal funds target rate has been steady at 5.25% to 5.5%. This high level was achieved after 11 consecutive rate hikes between March 2022 and July 2023 aimed at combating inflation. The decision to maintain this rate was reaffirmed during the Fed's meetings on June 11 and 12, 2024, highlighting a cautious approach as inflation pressures have started to ease but are still not within desired levels.


2. Initial Predictions for 2024

In March 2024, the Federal Reserve had anticipated that three quarter-point rate cuts would be necessary by the end of the year. This projection was based on early signs that inflation was receding and the need to foster economic growth. However, as the year progresses, these predictions are becoming less certain due to mixed economic signals and ongoing inflation concerns.


3. Changing Expectations

Economic data throughout 2024 has shown some positive trends, but not consistently enough for the Fed to commit to rate cuts confidently. The Federal Open Market Committee (FOMC) has already met four times this year without changing the rates, signaling a more data-driven and cautious approach. The Fed has indicated it will require more positive economic data before deciding on any rate cuts.


4. Upcoming FOMC Meetings

The remaining FOMC meetings for 2024 are scheduled for:


  • July 30-31
  • September 17-18
  • November 6-7
  • December 17-18


The outcomes of these meetings are crucial as they will determine if and when the Fed decides to lower the rates. Analysts and market participants will closely watch these sessions for any signs of policy shifts.


5. Impact of Rate Decreases

When the Fed eventually lowers the federal funds rate, it will have various effects on the economy:


  • Immediate Impact on Short-Term Investments: CDs, money markets, and bank savings rates will likely see immediate, though slight, reductions.
  • Mortgage Rates: Changes here are more complex and influenced by factors like creditworthiness and loan terms. However, a lower federal funds rate generally contributes to a decrease in mortgage rates over time.
  • Economic Stimulus: Lower rates can stimulate borrowing and spending, supporting economic growth.


Understanding these dynamics can help you better navigate your financial decisions. For tailored advice on how potential rate changes might affect your investments and financial plans, contact Wayfinder Capital. Our experts are here to guide you through these uncertain times with strategic insights and personalized advice.


Contact us today to discuss how we can help optimize your financial strategy in light of anticipated Fed rate changes.

Maximizing Tax Savings When Paying for College

15 Aug, 2024
If you or someone in your network is a parent of one of the over 18 million students headed off to begin or continue their undergraduate studies this fall, we want to highlight an important aspect that often arises during this time of year: financial considerations for college students. With tuition more than doubling since the 1960s, it's essential to plan wisely to ensure a smooth transition in and through the college years. Here are some practical tips and considerations that will help: 1. Budgeting Basics Encourage your student to create a budget, outlining their expenses such as tuition, books, housing, food, and miscellaneous costs. Adjust this budget each year as necessary to reflect changes in expenses and income. 2. Educate About Responsible Borrowing Understanding the implications of student loans and the importance of borrowing responsibly is crucial. Regular discussions about the long-term impact of student loan debt on financial goals post-graduation can help your student make informed decisions. 3. Explore or Revisit Financial Aid Securing financial aid isn't a one-time affair — it's an ongoing process. Every fall, revisit your student’s financial assistance, from scholarships and grants to student loans. Remember, the Free Application for Federal Student Aid (FAFSA) must be completed annually to ensure continued support throughout college. 4. Understand Your Tax-Advantaged Savings Plans If you have a 529 plan or Coverdell Education Savings Account (ESA), ensure you and your student know how to use it. These accounts offer tax benefits and can help offset the burden of tuition and related costs, but distributions must be used for qualifying expenses. 5. Take Advantage of Tax Credits An education credit can significantly help with the cost of higher education by reducing the amount of tax owed on your tax return. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits can lower your tax bill or even result in a refund if the credit reduces your tax to less than zero. 6. Encourage Part-Time Work While focusing on academics is essential, encourage your student to consider part-time work or internships to supplement their income and gain valuable work experience. 7. Utilize Student Discounts and Resources Apple, Verizon, Sam’s Club, and Amazon Prime are just a few companies offering education discounts. Additionally, encourage your student to utilize campus resources such as career services and financial literacy programs. 8. Plan for Post-Graduation Repayment Whether graduation is one or four years away, help your student develop a plan for post-graduation loan repayment. Consider factors such as income-driven repayment plans, loan consolidation, and strategies for accelerating debt repayment. 9. Prepare for Emergencies Establishing an emergency fund is crucial to prepare for unexpected expenses that may arise during the college years. Additionally, consider creating essential legal documents such as a power of attorney, a living will, and a HIPAA authorization for your young adult.  These tips provide helpful insights into managing college expenses and optimizing financial aid and tax benefits. For personalized guidance and support to navigate this formative time in your student’s life, contact Wayfinder Capital. We’re here to help you make the most informed financial decisions for your family’s future.
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