The Federal Reserve is expected to continue lowering interest rates, having cut its benchmark rate for the first time in years in October 2024. This initial cut brought the federal funds rate down to a range of 4.75% to 5%, a significant shift from its 23-year high, where it had been holding steady since mid-2023. The goal is to maintain momentum as inflation approaches the Fed’s long-term 2% target, balancing economic growth with price stability.
At the upcoming meeting on November 6, 2024, economists overwhelmingly predict another 0.25% rate cut, likely followed by a similar reduction in December, which would take the rate to around 4.25-4.5%. This easing approach aligns with recent economic indicators, like steady consumer spending and a robust job market, which have increased the Fed’s confidence in reaching sustainable inflation goals. Despite the gradual rate cuts, the Fed remains attentive to both its employment and inflation mandates, prepared to pivot if growth shows signs of slowing unexpectedly.
As these reductions ease pressure on borrowing costs, consumers may start to feel relief on adjustable-rate loans, including mortgages and credit cards. However, it’s important to keep in mind that while the Fed sets the tone for interest rates, the impacts on specific loans and credit products can take time to trickle down. Observers should watch for further updates, especially with any economic shifts tied to the upcoming presidential election and holiday season spending, both of which could affect the inflation outlook going into 2025.
With the Fed gradually reducing interest rates, it could be an ideal time to review your real estate plans. Lower rates may ease borrowing costs, making it more affordable to consider buying or investing in Arizona property. For guidance on navigating this changing market, reach out to me, Francesca Zanzucchi, your trusted Arizona Realtor at 602-607-7258 or email Fran@holdings22.com to explore your options today!
