FED Meeting June 2024: Why The Interest Rate Cuts Might Not Happen At All?

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As a seasoned crypto investor with a background in economics, I closely follow the Federal Reserve System (FED) and its decisions on interest rates and inflation. The FED meeting is always an anticipated event for commoners and investors alike as it can significantly impact our finances.

As a crypto investor, I’m constantly intrigued by the buzz surrounding interest rates as they significantly influence our daily lives. The term “interest” refers to the extra amount a borrower pays beyond the loan principal, while it’s also the return banks offer for depositing money with them as part of their financial programs. However, who sets these interest rates? In the United States, the Federal Reserve System plays this crucial role by making decisions on interest rates, alongside other economic factors like inflation – the rate at which the price of goods and services changes. The Fed accomplishes this through their FED meetings.

As a researcher, I’m observing that one of the Federal Reserve (FED) meetings is currently underway on its second and last day. This highly anticipated event holds significant importance for both common people and investors since the FED’s decisions can have substantial implications for their financial situations.

FED Meeting History & Expectation

As a crypto investor, I’d describe it this way: The Federal Reserve System, commonly known as the “FED,” is the central banking authority of the United States, founded in 1913 with the primary goal of overseeing financial institutions. Throughout the year, the FED convenes eight meetings for its Federal Open Market Committee (FOMC). During these gatherings, we, as members of the committee, engage in deliberations to shape monetary policies and set interest rates.

At the start of the year, I noted that the Federal Reserve (FED) aimed to reduce inflation to 2% by year-end and planned to implement interest rate cuts to achieve this goal. Currently, the US inflation rate hovers around 3.4%. This is a significant improvement compared to the concerning figure of 9% recorded in June 2022.

As a researcher studying monetary policy, I’ve noticed that the European Central Bank and the Bank of Canada have recently reduced their interest rates. This trend may influence the Federal Reserve’s decision during today’s meeting. However, it is important to note that the outcome is not guaranteed as the Fed officials may or may not follow suit.

Will Interest Cuts Happen In This June FED Meeting?

Borrowing money currently comes with some challenge, as the Federal Reserve interest rate hovers between 5.25% and 5.50%. This is the highest level seen in the last 23 years and has remained unchanged for nearly a year. The likelihood of this rate remaining static is more significant compared to any other potential outcome.

Michael Feroli, the Chief Economist for the United States at J.P. Morgan, previously expressed that the American economy is making progress in the right direction.

During the press conference, Chairman Powell is anticipated to convey assurance that the economy remains on a positive trajectory and that the Federal Open Market Committee (FOMC) has the luxury of being cautious before feeling confident that inflation will approach the 2% target.

As an analyst, I’ve observed a notable correlation between the surge in employment numbers from the previous month and the current interest rate trend. The Labor Department reported an addition of 297,000 jobs, which is commendable. However, it’s essential to consider that the unemployment rate remains at 4%, which is relatively low but still below the ideal threshold. The reason being, a significant portion of these newly created jobs were part-time positions rather than full-time opportunities.

According to numerous analysts’ assessments, the inflation rate may hold steady or even decrease at this point, with the probability of an upward trend being relatively slim. These experts maintain a favorable perspective on the implications for the finance sector. In their view, assuming the economy remains stable, inflation rates should not significantly influence the financial market.

In the upcoming June Federal Reserve meeting, there will be no reduction in interest rates. However, the officials may disclose when such reductions are expected to occur.

Interest Rate Cuts Might Not Happen At All

Some well-known financial strategists, such as Lance Roberts, have raised the notion that interest rates might not be reduced at all given the current strength of the economy. Furthermore, there isn’t definitive evidence supporting the claim that inflation is moderating as swiftly as desired.

The Federal Reserve meeting has indicated a possible reduction of interest rates three times after thorough deliberation. Should this occur against the odds, the initial cut could take place in September rather than earlier. Subsequently, two further cuts are anticipated in November and December to bring interest rates closer to the 2% target.

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2024-06-12 11:58