Federal Reserve Set to Announce Final Interest Rate Decision of 2024 in December Meeting

The Federal Reserve (Fed) is expected to announce a 0.25 percentage point cut to its benchmark interest rate, bringing it down to a range of 4.25% to 4.5%. This will mark the Fed's third consecutive rate cut for the year, with the first two occurring in September and November. The decision will come during the Fed's Federal Open Market Committee (FOMC) meeting on December 18.

The Impact on Consumers and the Economy

The anticipated rate cut is welcome news for consumers, as it could potentially ease borrowing costs for various loans and credit products. However, experts note that a 0.25 percentage point reduction may not have a significant impact on monthly debt payments. LendingTree's chief credit analyst, Matt Schulz, suggests that while it may reduce payments by a dollar or two, the overall effect may be minimal for those with existing debt.

Inflation and Economic Trends

While inflation has moderated since its peak of 9.1% in June 2022, prices for goods and services remain elevated compared to pre-pandemic levels. The Fed's decision to raise interest rates in 2022 aimed to dampen economic demand and curb inflation. However, sustained high prices are likely to persist without a significant period of deflation, which typically occurs during economic downturns.

The Potential Impact of Trump's Economic Plans

Incoming President Donald Trump has proposed various economic measures, including imposing tariffs on imports from Mexico, Canada, and China. While these tariffs are intended to address rising prices, economists express concern that they could have inflationary effects on consumer goods. The potential for increased prices resulting from these tariffs has led to speculation about the Fed's future rate decisions, with analysts anticipating a more cautious approach to monetary policy in light of the new administration's policies.

Future Rate Cuts and Economic Projections

Looking ahead to 2025, economists anticipate that the Fed will continue to implement rate cuts, albeit at a slower pace than previously projected. The Fed's summary of economic projections is set to be released alongside the interest rate decision on December 18, providing insight into the central bank's expectations for the coming year.