As the US economy enters a pivotal week, all eyes are on the Federal Reserve, which is expected to cut interest rates for the first time since 2020. This move is significant in the central bank's ongoing battle with inflation and for Americans grappling with a higher cost of living over the past two years.
However, this anticipated rate cut is materializing later than initially expected by both the Fed and Wall Street at the beginning of the year. Fed officials and investors had been looking forward to a decrease in borrowing costs in 2024, as per their economic projections. Towards the end of last year, there was optimism that the Fed would initiate rate cuts early in 2024, providing relief to consumers and businesses facing financial strain due to increased costs.
Forecasts from the futures market suggested a potential rate cut in the spring, and major Wall Street banks estimated that the first rate cut could happen before summer. Despite these expectations, nine months have passed without any rate cuts, disappointing Wall Street and leaving US consumers dealing with elevated interest rates.
Today marks a potential turning point as the Federal Reserve convenes to address the issue. The decision to cut interest rates could have far-reaching implications for the economy, impacting everything from consumer spending to business investments.
