The Fed is meeting this week. Here’s what experts are saying about the prospects for a rate cut.

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Americans are bearing the financial burden of higher costs all types of loansFrom mortgages to credit cards after two years of interest rate hikes by the Federal Reserve. With the central bank meeting on Wednesday, economists and consumers alike have one question on their minds: When will the central bank start cutting rates?

Answer: Almost certainly not this month, and probably not at its next meeting, according to Wall Street forecasters.

Most economists surveyed by financial data company FactSet expect the Fed to keep its benchmark rate steady at its next meeting on Wednesday as well as on May 1. Consumers with low borrowing costs may have to wait until next month for relief. FactSet data shows that about half of economists now consider the Fed’s first rate cut in four years at its June 12 meeting.

The Fed set for March 2022 a flurry of rate hikes as inflation surged during the pandemic, reaching a 40-year high in June that year. Although inflation has declined sharply since then, it remains higher than the Fed expected, which is why economists believe the central bank will keep rates on hold this week.

That doesn’t mean the Fed won’t say anything noteworthy. Experts said the Fed’s latest economic outlook could give a hint about when rate relief might come.

“The Fed is going to take a lot of oxygen out of the room this week as they conclude their March meeting on Wednesday afternoon,” Sam Millette, director of fixed income at Commonwealth Financial Network, said in an email. “We’ve seen some mixed economic data at the beginning of the year. It will be interesting to see how the Fed responds to that, especially in Fed Chairman Jerome Powell’s post-meeting press conference.”

Here’s what to know about Wednesday’s Fed meeting and what it means for your money.

When is the Fed meeting this week?

The Federal Reserve’s Open Market Committee will meet on March 19-20. The rate-setting panel will announce its rate decision on March 20 at 2 p.m. Eastern Time.

Chairman Jerome Powell will hold a press conference at 2:30 p.m. on Wednesday to discuss the FOMC’s rate decision and provide information on the central bank’s outlook.

When and by how much will the Fed cut interest rates?

The Fed is expected to hold the federal funds rate at a range of 5.25% to 5.5% on Wednesday.

The question is whether the central bank can provide guidance about the expected timing of the first rate cut since March 2020, when the economy was in decline due to the pandemic, allowing the Fed to keep borrowing costs under control to boost the economy. Was motivated to make cuts.

On Wednesday, analysts expect Powell to reiterate that the Fed wants to see continued improvement in its fight against inflation before cutting rates.

Ryan Sweet, chief U.S. economist at Oxford Economics, told investors on Monday that the Fed will keep its forward guidance unchanged, stressing that it needs more evidence that inflation is below its 2% level before cutting interest rates. Is on a steady path towards the goal.” Report.

Economists still think the Fed could cut rates several times in 2024, although some economists are now projecting fewer cuts than previously. For example, Goldman Sachs said on Monday it planned three cuts in 2024, down from its earlier forecast of four cuts this year.

“This change is mainly because inflation has strengthened slightly more than we expected,” Goldman Sachs economists said in a research note.

What is the inflation rate in 2024?

Consumer prices rose in February 3.2% on annual basisThat’s faster than January’s 3.1% pace and well above the 2% target sought by the Fed.

Certainly, inflation has moderated substantially after touching a four-decade peak of 9.1% in June 2022, but it remains higher than its pre-pandemic level of around 2% and represents a reason That economists believe the Fed will pursue rate cuts. At least till June.

If inflation is down, why isn’t the Fed cutting rates?

Powell has repeatedly said that cutting rates too soon could cause inflation to rise again, causing more financial pain for consumers and businesses.

Villanova University economics professor Victor Lee, a former senior economist at the Federal Reserve Bank, said, “The Fed does not want to repeat the same mistake it made in the 1970s, in which they announced that they had got inflation under control too soon. , so that it can emerge again.” Atlanta, in an email.

He added, “But the Fed knows that they could damage the soft landing they have created by keeping rates high for too long and cause a recession.”

The good news is that the Fed is unlikely to raise rates either, said Jacob Channell, economist at LendingTree. Inflation is falling less rapidly Exceeding investors’ expectations and amid signs of strong economic growth.

“Fortunately, although the cut may still be delayed by a few months (or more), it does not seem likely that the Fed will raise rates again anytime soon,” the channel said in an email. “We will need to see inflation growth much faster than it currently is before the Fed starts seriously considering more hikes.”

How will the Fed’s rate decision affect your money?

If the Fed holds its benchmark rate steady on Wednesday, borrowing costs will remain high, hurting everything credit card rates Loan for auto purchase or houses, experts say. For example, according to the Consumer Financial Protection Bureau, credit card APRs are at their highest level since the Fed began tracking them in 1994.

One advantage of increased interest rates is that savers can get stronger returns by investing their money. High-yield savings accounts or CDs,

“Some of the highest CD rates right now are found in the shorter term, so if you need access to cash in 6 months or a year’s time they will remain accessible,” Elizabeth Renter, data analyst at NerdWallet, said in an email.

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