Interest rate predictions for the rest of the year? There is no crystal ball to know exactly what the Fed will do at its upcoming meeting, nor at any of the rest of the meetings this year. We’re still above the Federal Reserve’s desired target of 2%, though consumer prices are rising at a slower rate than most of the past three years. Lawrence Yun, Economist, believes that the Fed will do three more rate cuts. With anticipated easing of inflation, he believes 5-8 rate rounds of rate cuts are in order for 2025.
The elephant in the room is the budget deficit. Recently I read that the U.S. national debt is rising by $1 trillion every 100 hundred days! https://www.cnbc.com/2024/03/01/the-us-national-debt-is-rising-by-1-trillion-about-every-100-days.html. Why does the budget deficit have anything to do with current rates? Because the government borrows lots of money and is paying interest on the loans. With rate cuts, the government would save tremendously.
My personal take? The government is feeling the pain of high interest rates, as the interest becomes due on the national debt. The Federal Reserve is officially non-partisan. However, if political pressure to lower rates in an election year prevails, we may see a cut or two this year, though I do not believe any rate cuts will hep the inflationary pressures in our economy.
When I talk with people in the community, it seems locals feel that after the election will be the best time to sell their houses (or buy). Many people are in a hold pattern because the last few years have been rough on many people’s wallets.
Check out this history of the national debt. https://www.visualcapitalist.com/timeline-150-years-of-u-s-national-debt/
