The Federal Reserve meets this week. Here's what experts say about the prospects for interest rate cuts.

Americans bear the financial burden of high costs All type of loansFrom mortgages to credit cards, two years after the Fed raised interest rates. With the central bank meeting on Wednesday, one question is on the minds of economists and consumers alike: When will the central bank start cutting interest rates?

The answer: Certainly not this month, and perhaps not at its next meeting, according to Wall Street forecasts.

Most economists surveyed by financial data firm FactSet believe the Fed will keep its benchmark interest rate steady on Wednesday, as well as at its next meeting on May 1. Consumers looking forward to lower borrowing costs may have to wait until next month for relief, with FactSet data showing that at the Fed's June 12 meeting, about half of economists now expect the first cut in four years.

The Fed began its interest rate hike wave in March 2022 as inflation surged during the pandemic, reaching a 40-year high in June of that year. Although inflation has slowed rapidly since then, it is still higher than the Fed would like, which is why economists believe the central bank will keep interest rates steady this week.

This doesn't mean the Fed won't say anything noteworthy. Experts said the Fed's latest economic forecasts could offer hints about when easing interest rates might be possible.

“The Fed will be taking a lot of oxygen out of the room this week when it wraps up its March meeting on Wednesday afternoon,” Sam Mileti, director of fixed income at Commonwealth Financial Network, said in an email. “We saw some mixed economic data at the beginning of the year. It will be interesting to see how the Fed reacts to that, especially in the press conference that Fed Chair Jerome Powell will give after the meeting.”

Here's what to know about the Federal Reserve's meeting on Wednesday and what it means for your money.

When will the Fed meet this week?

The Federal Reserve's Open Market Committee meets on March 19-20. The Rate Setting Committee will announce its decision on rates at 2 pm ET on March 20.

Chairman Jerome Powell will hold a press conference at 2:30 pm on Wednesday to discuss the FOMC's interest rate decision and provide information on the central bank's expectations.

When and by how much will the Fed cut interest rates?

On Wednesday, the Fed is expected to keep the federal funds rate in a range of 5.25% to 5.5%.

The question is whether the central bank might provide guidance on the expected timing of what would mark the first interest rate cut since March 2020, when the economy was in free fall due to the pandemic, prompting the Fed to cut borrowing costs to support the economy.

On Wednesday, analysts expect Powell to reiterate that the Fed wants to see continued improvement in its battle against inflation before cutting interest rates.

“The Fed will keep its forward guidance unchanged while emphasizing that they need more evidence that inflation is on a sustainable path towards its 2% target,” Ryan Sweet, chief US economist at Oxford Economics, told investors on Monday in a press conference. before lowering interest rates. a report.

Economists still believe the Fed may cut interest rates several times in 2024, although some economists now expect smaller cuts than they previously expected. For example, Goldman Sachs said on Monday that it plans three cuts in 2024, down from its previous forecast of four cuts this year.

This change “is mainly because inflation was slightly stronger than we expected,” economists at Goldman Sachs said in a research note.

What will be the inflation rate in 2024?

In February, consumer prices rose 3.2% on an annual basisfaster than January's pace of 3.1% and well above the 2% target sought by the Fed.

To be sure, inflation has slowed considerably after reaching a four-decade peak of 9.1% in June 2022, but it remains above pre-pandemic levels of about 2% and represents one reason economists believe the Fed will pull back on… Interest rate cuts. Until June at least.

If inflation falls, why doesn't the Fed lower interest rates?

Powell has repeatedly suggested that cutting interest rates too early could lead to a return of inflation, causing more financial pain for consumers and businesses.

“The Fed doesn't want to repeat the same mistake it made in the 1970s of announcing it beat inflation too early, only to have it come back,” said Victor Lee, an economics professor at Villanova University and a former senior economist at the Fed. “. Atlanta, per email.

“But the Fed knows it can sabotage the soft landing it created by keeping interest rates too high for too long and causing a recession,” he added.

The good news is that the Fed is unlikely to raise interest rates even then, said Jacob Channel, an economist at LendingTree. Inflation cools less quickly than investors had hoped and amid signs that economic growth remains strong.

“Fortunately, while cuts may still be available for a few months (or more), it does not look like the Fed will raise rates again anytime soon,” Channel said in an email. “We will need to see inflation growth gain much more strength than it currently has before the Fed starts seriously considering further increases.”

How will the Fed's interest rate decision affect your money?

If the Fed keeps interest rates steady on Wednesday, borrowing costs will remain high, affecting everything Credit card rates To obtain loans to purchase cars or Role, say experts. For example, credit card APRs are at their highest levels since the Federal Reserve began tracking them in 1994. According to To the Consumer Financial Protection Bureau.

There is an upside to high interest rates: savers can get strong returns by putting their money in High-yield savings accounts or CDs.

“Some of the highest CD rates are found in shorter terms right now, so they remain affordable if you need access to cash in 6 months or 1 year,” Elizabeth Renter, a data analyst at NerdWallet, noted in an email.