Next Fed Meeting: When It Is In September and What To Expect

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The next Federal Open Market Committee (FOMC) is on September 17-18, 2024. This is one of the key dates that investors, economists, and policymakers mark on their calendars.

The Fed is widely expected to cut its benchmark fed funds rate for the first time in more than four years at the September meeting. Fed officials have signaled that rate cuts are coming as inflation has moderated and the labor market has cooled, though they haven’t commented on the pace or depth of the easing.

There is significant debate among market participants and economists about whether the Fed will cut the rate by 25 and 50 basis points in September. The rate has been in range of 5.25%-5.50%, the highest level since 2001, for more than a year.

The FOMC is the Federal Reserve System’s monetary policy-making arm, and its decisions have far-reaching implications for the U.S. economy. Meeting eight times a year, and occasionally more if the situation demands, the FOMC deliberates on the nation’s interest rates and other financial policies. These decisions influence everything from the rates you get on your savings account to the cost of borrowing for homes and businesses. So, when the FOMC speaks, people listen.

Key Takeaways

• The Federal Open Market Committee (FOMC) once again held its benchmark interest steady during its most recent meeting in July, as well as prior meetings this year.
• The next FOMC meeting takes place on September 17-18, 2024, and Fed watchers widely expect the central bank to cut the influential fed funds rate for the first time in more than four years.
• The fed funds rate influences borrowing costs for mortgages, credit cards, car loans and other credit, and has been kept at a two-decade high for more than a year to discourage spending and subdue inflation.
• The FOMC implemented 11 rate hikes in a cycle that ended in July 2023. Since then, the fed funds rate has been held steady in a range of 5.25%-5.50%.

The Latest Fed Moves

During the most recent FOMC meeting held on July 30-31, 2024, interest rates were kept unchanged at 5.25%-5.50%.

This was expected, as it gave the Fed additional time to evaluate if the current rates keep inflation at bay without hampering economic growth too much. In its statement after the meeting, the FOMC said: “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

During the 2022-2023 tightening cycle, the Fed increased rates 11 times to slow inflation. The central bank has held rates steady at 5.25%-5.50% since July 2023 as inflation has moved lower, albeit slowly, toward the Fed’s annual target of 2%.

What Happens at Fed Meetings?

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System, the central bank of the United States. The FOMC holds eight regularly scheduled meetings during the year and may hold other meetings as needed to set emergency short-term interest rates or implement other policy tools.

The FOMC consists of 12 members: the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis. At each FOMC meeting, the members review economic and financial conditions, determine the appropriate stance of monetary policy, and assess the risks to its long-term goals of price stability and sustainable economic growth.

The FOMC issues a statement after each meeting summarizing its assessment of the economy and policy decisions. The statement also includes an implementation note providing operational details on how the policy decision will be carried out. The FOMC also publishes its Summary of Economic Projections (SEP) four times a year, showing the members’ forecasts for key economic variables over the next three years and their views on the appropriate path of the federal funds rate.

The FOMC meetings are closed to the public but are recorded and transcribed. The minutes of each meeting are released three weeks after the date of the policy decision. The transcripts are released with a five-year lag.

Note

The FOMC chair typically holds a press conference after four of the eight meetings each year, where the chair explains the policy decision and answers questions from journalists.

Next Fed Meeting: What to Expect in September

Federal Reserve Chair Jerome Powell and other officials have made clear that the central bank is prepared to start cutting interest rates. While inflation is still slightly above the Fed’s 2% target, Fed officials have said that they don’t need to wait until it’s hit the target before easing policy. Policymakers have also increasingly expressed concern about a weakening in the labor market.

The Fed aims to achieve a soft landing for the U.S. economy while balancing its dual mandate of maximum employment and price stability. The Fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the U.S. dollar.

Heading into the September meeting, investors and economists are certain that the FOMC will decide to cut the fed funds rate, but there is little agreement on whether officials will cut the rate by a quarter percentage point or half a percentage point.

The lack of market consensus heading into a Fed meeting is unusual. Since the Fed normally doesn’t adjust rates by more than a quarter point, some analysts say that a half-point cut could needlessly send the signal that the Fed sees the possibility of a significant deterioration of the economy. Others say that a large cut is warranted, arguing the Fed has waited too long to begin easing policy.

In addition to the decision on rates, the FOMC will release its quarterly economic projections, which include forecasts from committee members on where the fed funds rate will be in the future. Those projections will be closely scrutinized by investors and economists, as will the FOMC statement and Chair Powell’s comments at the post-meeting press conference, for signals on what the Fed might do in subsequent meetings.

Most Recent Fed Meeting (July 30-31, 2024)

During the latest FOMC meeting decision, released on July 31, the Fed again held the fed funds rate steady at 5.25-5.50%, continuing a pause from an aggressive rate-hiking campaign that began in March 2022 to fight rising inflation. The Fed also signaled that it was willing to keep rates steady until inflation moderated toward its 2% target. While inflation had moderated somewhat, the Fed indicated that it would continue to proceed carefully as it monitored the economy and continued to unwind its balance sheet to reduce its holdings of treasuries, agency debt, and mortgage-backed securities (MBS).

The market widely expected the Fed’s decision to hold rates steady following a series of rate hikes that culminated in July 2023. The Fed had raised rates 11 times since early 2022-’23 to cool economic activity and tame inflation rates that peaked at more than 9% last year. The Fed’s rate-hiking campaign has been the most aggressive since the 1980s, and it sparked some turmoil in the banking sector, the stock market, and the global economy. However, rates at around 5.50% are still less than half of their 1980s peak.

The Fed reported after its July meeting that the American economy remains strong and the labor market resilient–but also acknowledged that the pace of growth had slowed down compared to 2023.

As usual, the Fed reaffirmed its commitment to achieving its dual mandate of maximum employment and price stability and said that it would act as appropriate to sustain the expansion. The Fed’s policy moves would depend on what economic indicators, including the Consumer Price Index (CPI), payrolls, and gross domestic product (GDP) growth, showed.

Important

The Fed’s decisions and statements have important implications for investors, as they affect the cost of borrowing, the value of assets, and the strength of the U.S. dollar. Investors and analysts pay close attention to the Fed’s announcements and actions, as those can have a significant impact on market conditions, which affect their portfolios, strategies, and recommendations.

Fed Meeting Calendar

The FOMC regularly meets eight times a year. The table below shows the calendar from December 2022 thru 2024, and how the Fed decided on interest rate hikes.

Did the Fed Raise Interest Rates in July 2024?

No, the Fed once again held interest rates steady at 5.25%-5.50% during its July, 2024 FOMC meeting. Rates have been steady at this level for a year, since July 2023.

How Many Rate Hikes Were There in 2023?

There were four rate increases in 2023, occurring at the February, March, May, and July FOMC meetings.

Will the Fed Cut Rates This Year?

Fed Chair Powell has said that “the time has come for policy to adjust,” indicating that rate cuts are on the horizon. Fed officials have not commented on the pace or depth of possible rate cuts, but have acknowledged progress in controlling inflation and concern about a weakening in the labor market. Investors and economists expect that the Fed will make multiple cuts to the fed funds rate before the end of the year.

The Bottom Line

The next FOMC meeting will be held in September 2024. The Fed has held rates steady for more than a year at 5.25%-5.50%, the highest level since 2001. Experts predict that the Fed will soon shift to rate cuts, although the extent to which they do will depend on economic conditions in the coming months.

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