Joel Libava
Let’s talk about interest rates. And potential rate cuts.
According to an article published on CNN in January of this year, “The central bank has raised rates 11 times since March 2022 in a bid to combat the fastest inflation in decades. Price hikes have eased substantially since then, inching closer to the Fed’s 2% target. That means the Fed is due to cut rates in 2024, which officials themselves projected last month, but the central bank’s latest policy statement released Wednesday pushed back on expectations of the first rate cut coming in March.” But there’s still some hope.
“The Committee does not expect it will be appropriate to reduce the target range for the federal funds rate until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
Interest Rate Cuts: Fast-Forward To Today
From Dallas Federal Reserve President Lorie Logan:
“Before lowering rates, ‘I will need to see more of the uncertainty resolved about which economic path we’re on. And, as always the (Federal Open Market Committee) should remain prepared to respond appropriately if inflation stops falling,’ she said.”
Logan said she continues to be concerned about inflation, which had been falling back toward the Fed’s 2% target last year but has made less progress in the first months of 2024.
Admittedly, I was more positive about interest rate cuts at the beginning of 2024. Now?
Inflation continue to be an issue.
So until it steadies to around 2%, interest rates probably won’t be touched.
And U.S. small businesses, including franchise businesses, need rates to go down, so they can do what they do best; provide the great products and services consumers/businesses want and need.
Finally, I just stumbled upon this interesting quote.
“When interest rates are high you want the average direction in which interest rates are moving to be downward; when interest rates are low you want the average direction to be upward.”
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