The Federal Reserve is meeting again on Sept. 17 and 18, 2024, when the central bank will discuss the possibility of cutting interest rates.
At its last meeting in July, the Federal Open Market Committee held the federal fund's target rate steady at 5.25% to 5.5%, where it's been since July 2023.
To combat inflation, the rate was raised 11 times between March 2022 and July 2023. Inflation has cooled, but the Fed has signaled it wants more positive data before pulling the trigger.
In June, the consumer price index fell to 3%, the lowest it's been in over three years. At that point, the Fed projected the fed funds rate would be cut to 5.1% by the end of 2024.
The CME Group's FedWatch tool, which measures the probability of a rate adjustment, has predicted the first cut will come in September.
Interest rates
- When will interest rates go down?
- What will happen when rates go down?
- What to do while interest rates are high
- What you should do when rates go down
- FAQs
When will interest rates go down?
The Federal Open Market Committee (FOMC) meets eight times a year to discuss whether to adjust the federal funds rate, a benchmark that governs overnight lending between commercial banks.
Led by Federal Reserve Chair Jerome Powell, the group of 12 considers inflation, employment and the rate of borrowing, among other economic factors. Since the onset of the Covid-19 pandemic in March 2022, the FOMC has increased the target rate 11 times to curb inflation.
Meeting | Rate adjustment | Fed fund rate target range |
---|---|---|
March 15-16, 2022 | 0.25% increase | 0.25-0.5% |
May 3-4, 2022 | 0.50% increase | 0.75-1.0% |
June 14-15, 2022 | 0.75% increase | 1.50-1.75% |
July 26-27, 2022 | 0.75% increase | 2.25-2.5% |
Sept. 20-21, 2022 | 0.75% increase | 3-3.25% |
Nov. 1-2, 2022 | 0.75% increase | 3.75-4% |
Dec. 13-14, 2022 | 0.50% increase | 4.25-4.5% |
Jan. 31-Feb. 1, 2023 | 0.25% increase | 4.5-4.75% |
March 21-22, 2023 | 0.25% increase | 4.75-5.0% |
May 2-3, 2023 | 0.25% increase | 5.0-5.25% |
July 25-26, 2023 | 0.25% increase | 5.25-5.5% |
The committee has met five times so far in 2024 but has declined to change rates. The remaining meetings this year are:
- Sept. 17 and Sept. 18, 2024
- Nov. 6 and Nov. 7, 2024
- Dec. 17 and Dec. 18, 2024
Amy Hubble, principal investment advisor with Radix Financial, says that when the rate does drop, it won't be a massive shift.
"If they cut 0.25% at a time, that's 12 cuts over several years," Hubble said. "So this isn't something that's going to happen quickly."
What will happen when rates go down?
The Federal Reserve doesn't directly control the interest rates charged by your bank, but it does influence them: The Fed sets the federal funds rate, which determines how much banks can charge each other when lending or borrowing excess reserves overnight. Banks, in turn, adjust the rates they charge for credit cards, mortgages, personal loans and other financial products.
The fed fund rate has been 5.25% to 5.50% since July 2023. That's the highest since January 2001, when it rocketed to 6.00% after the dot-com bubble burst.
When the Fed does lower its benchmark rate "it will affect everything a little differently and in different magnitudes," Hubble said. "CDs and other shorter-term cash vehicles, like money markets and bank savings rates, will see the rates drop almost immediately."
Changes to mortgage rates are more complex because creditworthiness and loan terms play a bigger role.
"These rates may not necessarily move exactly in tandem with a reduction in the federal funds rate," Hubble said. "But it's still fair to assume that a lower fund rate will also mean a lower mortgage rate."
What to do while interest rates are high
There are several money moves you can make to get ready for a rate cut.
Open a CD
When the Fed lowers rates, annual percentage yields (APY) on savings accounts dip, too. But rates on CDs are locked in when you open the account and stay fixed even if APYs decline.
Bank5 Connect offers high yields and a range of CD terms, including a 24-month investment CD that allows you to add more funds during the term.
Bank5 Connect CDs
Bank5 Connect is a Member FDIC.
Annual Percentage Yield (APY)
From 0.85% to 5.50% APY
Terms
From 6 months to 36 months
Minimum deposit
$500
Monthly fee
None
Early withdrawal penalty fee
There's an early withdrawal penalty equal to 3 months of interest for CDs with terms less than one year, and an early withdrawal penalty equal to 6 months of interest for CDs with terms of one year or greater
Terms apply.
Explore adjustable-rate mortgages
Hubble is advising clients to look into adjustable rate mortgages (ARMs). These home loans start with a fixed mortgage rate for a set timeframe. Once that time passes, though, your rate changes at certain intervals.
A 7/1 ARM, for example, means you'll get a fixed rate for seven years, and then the rate will adjust every year. With mortgage rates likely to drop, a variable rate could be attractive.
"Even though we don't know the exact timing, the Fed has signaled that it is done with the hiking cycle," Hubble said. "We would not expect mortgage rates to move higher from here."
PNC Bank is a top choice for ARMs, with options for 5/1, 7/1 and 10/1 mortgages and adjustable rates available on conforming, VA and FHA loans.For homebuyers who meet income or location requirements, PNC offers a $5,000 closing cost grant.
PNC Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms
10 – 30 years
Credit needed
620
Minimum down payment
0% if moving forward with a USDA loan
Terms apply.
Read our PNC Bank mortgage review
Improve your credit score
Your credit score is one of the biggest factors lenders use to determine whether you'll get approved and the rate you'll be offered. If you've been waiting for rates to go down to apply for a mortgage or personal loan, now's the time to make sure your credit is in good shape.
A 620 FICO score is considered the baseline for a conventional mortgage. But if you have at least 750, you'll qualify for the most competitive rates. To raise your score:
- Make on-time payments in full. Payment history is the most important element of your credit score. (You'll also avoidlate fees and interest charges.)
- Request higher credit limits. If you raise your credit limit and keep your balance the same, it'll lower your credit utilization ratio, which accounts for 30% of your FICO® Score. (Just don't think of the additional credit as a green light for more spending.)
- Hold off on new lines of credit. The applications could require hard credit inquiries that ding your credit score. If you're approved, it will also lower the average age of your accounts.
Payments to phone, internet and utility companies aren't typically sent to credit-reporting agencies. With eCredable Lift®, though, you can have information from up to eight accounts sent to TransUnion. So your on-time payments can help you raise your credit score.
The deluxe eCredable LiftLocker adds budgeting tools, identity theft alerts andcredit monitoring, among other benefits.
eCredable
On Ecredable's secure site
Cost
$9.95 per month for eCredableLift®
$14.95 per month for eCredableLiftLocker™Credit report affected
Transunion®
Credit scoring model used
FICO® Score 8 (or newer) or VantageScore® 3 (or newer)
Results vary. See website for details.
How to sign up for eCredable:
- Link your eligible utility company accounts to eCredable
- Receive an updatedVantageScore® and/or FICO® Score
Learn more about eligible payments and how eCredable works.
What to do when rates go down
Here are a few financial options to consider once the Fed does slash interest rates.
Refinance your mortgage
If you bought your home when mortgage rates peaked in 2023, now is a good time to look into refinancing. After the Fed cuts the fed fund rate, mortgage rates should decline.
One of CNBC Select's top picks for mortgage refinancing, Ally Bank offers fixed and adjustable rate terms with no lender fees, which can save you thousands.
Ally Home
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, HomeReady loan and Jumbo loans
Terms
15 – 30 years
Credit needed
620
Minimum down payment
3% if moving forward with a HomeReady loan
Terms apply.
Refinance your student loans
After the Fed makes cuts, interest rates on student loans should drop, as well. Borrowers have felt the squeeze since the three-year moratorium on payments ended in October 2023.
SoFi offers terms of up to 20 years for refinancing student loans, with a 0.25% rate discount if you sign up for monthly autopay.
SoFi
Eligible borrowers
Undergraduate and graduate students, parents, health professionals
Loan amounts
$5,000 minimum (or up to state); maximum up to cost of attendance
Loan terms
Range from 5 to 15 years; up to 20 years for refinancing loans
Loan types
Variable and fixed
Co-signer required?
No
Offer student loan refinancing?
Yes - click here for details
Terms apply.
Pay off high-interest credit cards
The annual percentage rate on your credit cards should drop, too — making it easier to whittle down any outstanding balances.
So, prioritize making sizable payments now before rates go up again later.
FAQ
When will interest rates go down?
CME FedWatch, which plots the odds of rate changes, has put the likelihood of a cut in September at nearly 100%.
When is the next Fed meeting?
The Federal Open Market Committee will next meet on Sept. 17 and 18, 2024.
What will happen to mortgage rates if the Fed lowers rates?
Cuts to the Fed fund rate will likely mean lower mortgage rates, though it might not be immediate. Your creditworthiness and loan terms also affect the rate you're offered.
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Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Amy Hubble, principal investment advisor with Seattle-based Radix Financial. A certified financial planner, Hubble received a Ph.D. in consumer economics from the University of Georgia.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products.While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.