Countdown to the Fed’s September Meeting

Anticipation is growing for the Fed’s next two-day policy meeting, which will start tomorrow, Wednesday, September 18, 2024.  

And with good reason! If the Fed decides to cut short-term interest rates, it would be the first adjustment to be lower in more than four years.

In his August speech in Jackson Hole, Wyoming, Fed Chair Powell confirmed that “the time has come for policy to adjust.” He also indicated that the Fed is more concerned about supporting the labor market while its progress on inflation continues.

Powell’s hat tip to the labor market appears well-timed. As you can see in the chart below, the Labor Department’s August Job Openings and Labor Turnover Survey (JOLTS) fell to its lowest level in 3½ years and now sits at a ratio of 1.07 job openings to job seekers. The JOLTS update preceded a disappointing August jobs report, which showed payrolls expanded by 142,000.

Although most agree that we are entering a new lower interest rate environment, there remains discussion about how much and how fast the Fed will move in the months ahead.  Most Economists see the Fed dropping rates by 0.25% (25 basis points) tomorrow at 2:00PM Eastern, while others expect a cut of 0.5% (50 basis points).  Although I think the equity markets would welcome the larger cut, I do think a larger than expected cut would send a mixed message about the economy and is not warranted at this point in the economic cycle.  Either way it's clear, we are entering a period of looser monetary policy for the rest of this year and into next.  

About Rocklin Senavinin, CFP®

With over 20 years of experience in the financial planning industry, Roc has dedicated his career to helping individuals live comfortably in retirement and enjoy the assets they have spent their career building. He is co-founder of Fiduciary Wealth Management, a fee-only registered investment advisory firm in Little Rock, Arkansas. As a CERTIFIED FINANCIAL PLANNER™ professional, he has advanced training in the process of creating a personal financial plan that addresses a person’s comprehensive needs for the short and long term. To learn more, connect with Roc on LinkedIn or visit www.fidwm.com. If you have questions, feel free to schedule a phone call using this link.