Expected interest rate cuts for 2024 might be more fantasy than reality

In the year 2023, the Federal Reserve raised interest rates four times, and since 2022, has hiked them up eleven different times, the fastest pace in over 40 years. The year 2023 also brought record high rates on credit cards, home equity lines of credit, mortgages, car loans, and savings accounts.

But in the last meeting during December, the Fed indicated rate cuts are coming this year, sometime likely in June. But, not all financlial analysts are totally on board with the predictions.

Financial analyst Richard Rosso says they are planning for three or six rate cuts that have already been baked into the market, which might be wishful thinking.

"If the numbers for the economy stay as they are...I do not see three rate cuts. I think this talk of rates coming down...if this lukewarm economy continues...does not make a lot of sense," he says.

Indeed, the Fed has said they have targets of getting inflation under control and have done so considerably. The inflation rate sat at just over 3 percent at the end of 2023, compared to over 7 percent in 2022. But they still have a goal of getting it to around 2 percent.

All of this means Fed Chair Jerome Powell might have to reverse track on his initial predictions for the year.

"Rate increases are off the table...but the decrease everyone is expecting is not really in the picture, unless they are seeing something we are not," he says. "If this remains this slug as you go economy, and unemployment stays strong, then there is no reason to cut rates."

The most recent jobs report was encouraging, but still not enough to firmly say if the economy is heading in the right direction. Most people are job hopping less, and staying in one place more, which stabilizes income for most.

But even with the positive movement in inflation, we will still feel the impacts for a while.

"Inflation is going down...rate of acceleration is...however, the bucket of inflation is still full," he says. "You cannot add more to higher prices, but the bucket is still full. Prices are not going down; they are just not increasing at such a rapid rate anymore. So, you still feel the pain in your pocketbook as a consumer."

The Fed has said they will not be performing anymore increases to the rates.