Here's when the Federal Reserve could cut interest rates in 2024 (2024)

At its second gathering of 2024, held March 19 and 20, the Federal Reserve once again declined to adjust interest rates. It similarly held rates steady after its inaugural 2024 session in January.

The federal funds target rate has remained at 5.25% to 5.5% since summer 2023, the highest it's been in over 20 years.

The Fed raised the rate 11 times between March 2022 and July 2023 to combat ongoing inflation. After its December 2023 meeting, the Federal Open Market Committee (FOMC) predicted making three quarter-point cuts by the end of 2024 to lower the federal funds rate to 4.6%.

Inflation has started to recede, but the committee has signaled it wants to see more positive data before pulling the trigger.

The FOMC will have six more opportunities to cut interest rates this year, starting with its next meeting at the end of April.

When will interest rates go down?

  • When will the Fed cut interest rates?
  • What is the federal funds rate?
  • What you should do while waiting for rates to go down
  • What you should do when rates go down
  • FAQ
  • Bottom line

When will the Fed cut interest rates?

The 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.

In early March, the Fed indicated that it could lower rates by this summer. The committee has already convened twice in 2024 but opted not to change rates either time. The remaining FOMC meetings this year are:

  • April 30 and May 1, 2024
  • June 11 and June 12, 2024
  • July 30 and July 31, 2024
  • Sept. 17 and Sept. 18, 2024
  • Nov. 6 and Nov. 7, 2024
  • Dec. 17 and Dec. 18, 2024

That pushes the timeline to the next meeting, which ends May 1.

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What is the federal funds rate?

The Federal Reserve requires banks and other depository institutions to hold 10% of their deposits in reserve. To stay as close to that threshold as possible without dipping below, banks will loan each other money back and forth.

The FOMC sets the interest rate the banks can charge each other, known as the federal funds rate. So they can continue to make a profit, banks then adjust the interest rates they charge consumers.

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% in the wake of the dot-com bubble bursting.

When the FOMC raises the target range, it becomes more expensive for consumers to borrow money. Since the slew of hikes in the last two years, for example, the average credit card interest rate soared from 16.34% in March 2022 to nearly 21% in March 2024.

That sounds bad, but it can help slow the economy and lower inflation.

When the Fed lowers the benchmark rate, it becomes easier to borrow. That sounds great, but it opens the door for a possible spike in inflation.

What to do while waiting for interest rates to go down

It could be a while before rates drop, but there are still things you can do to get ready.

Open a certificate of deposit

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.

A high-yield Ally Bank® CD with an 18-month term has a 4.50% APY, with no monthly fees or minimum deposit requirements. Two- and four-year CDs both have a 3.75% APY but savers can adjust their rate if it goes up for their term and deposit amount.

Ally Bank® CDs

Ally Bank® is a Member FDIC.

  • Annual Percentage Yield (APY)

    From 3.00% to 4.50% APY

  • Terms

    From 3 months to 5 years

  • Minimum balance

    None

  • Monthly fee

    None

  • Early withdrawal penalty fee

    High Yield CDs and Raise Your Rate CDs have early withdrawal penalties that vary based on your CD term. With the No Penalty CD, withdraw all your money any time after the first 6 days following the date you funded the account and keep the interest earned with no penalty.

Terms apply.

Prime your credit score

If you've been waiting for rates to go down to apply for a mortgage or personal loan, now's the time to get your ducks in a row. 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. A credit score of 620 is considered the baseline for a conventional mortgage, but if you boost your score to at least 750, you could qualify for the most competitive rates.

  • 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. A solid record of on-time payments or a bump in income is usually necessary, but if you can 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 spending more.)
  • Hold off on new lines of credit. The application could require a hard inquiry that dings your credit and, if you're approved, it will lower the average age of your accounts.

eCredable Lift® is a paid service that sends information about positive utility payments to TransUnion, one of thethree major credit-reporting agencies. Utility companies aren't typically included on credit reports, so on-time payments wouldn't otherwise help you build credit.

For $9.95 a month, you can link up to eight accounts — including your phone and internet — and report up to 24 months of payment data. For $14.95 a month,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:

  1. Link your eligible utility company accounts to eCredable
  2. Receive an updatedVantageScore® and/or FICO® Score

Learn more about eligible payments and how eCredable works.

*Experian Boost™ also adds household payments to your report, but it's free and it works with Experian, rather than TransUnion. According to the company, users whose FICO Scores improve see an average increase of 13 points.

Experian Boost™

On Experian's secure site

  • Cost

    Free

  • Average credit score increase

    13 points, though results vary

  • Credit report affected

    Experian®

  • Credit scoring model used

    FICO® Score

Results will vary. See website for details.

How to sign up for Experian Boost:

  1. Connect the bank account(s) you use to pay your bills
  2. Choose and verify the positive payment data you want added to your Experian credit file
  3. Receive an updatedFICO® Score

Learn more about eligible payments and how Experian Boost 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 rates were peaking in 2023, now would be a good time to refinance. After the Fed cuts the fed fund rate, mortgage rates should follow suit.

One of CNBC Select's top picks for mortgage refinancing, Ally Bank offers fixed and adjustable rate terms with no application, origination, processing or underwritingfees. That can save you thousands. (Ally doesn't offer refinancing in Hawaii, Nevada, New Hampshire or New York, however.)

Ally Home

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

  • Types of loans

    Fixed-rate, adjustable-rate and jumbo loans available

  • Fixed-rate Terms

    15 – 30 years

  • Adjustable-rate Terms

    5/6 ARM, 7/6 ARM, 10/6 ARM

  • Credit needed

    Not disclosed

Terms apply.

Refinance your student loans

Interest on student loans should also fall after the Fed makes cuts. 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% discount on your rate if you sign up for monthly autopay.

Read on: Best student loan refinance companies

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

Once rates go down, the annual percentage rate (APR) on your credit cards will likely drop, as well, making it easier to polish off those balances.

So, prioritize making sizeable payments now before rates go up again later.

Compare and find the best CD

FAQ

The Federal Reserve has indicated that there's a good chance it would cut rates later in 2024.

The Federal Reserve Board will next meet on April 30 to May 1, 2024.

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Bottom Line

The Federal Reserve has seven more chances to cut rates in 2024. When it happens, all kinds of borrowing will be easier for the average American. But there are several smart money moves you can make before then, too

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Read more

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Understanding what the federal funds rate is and how it affects your wallet

The best high-yield savings accounts

These are the 6 best banks for CDs

*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

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.

Here's when the Federal Reserve could cut interest rates in 2024 (2024)

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