How Big Will the Fed Rate Cut Be? Officials Need to Strike a Balance.

Published On Sep 18, 2024, 5:04 AM

Federal Reserve officials are expected to cut interest rates for the first time since early 2020, likely by either a quarter or half percentage point. This marks a significant shift in their approach from raising rates to controlling inflation to now addressing a cooling labor market and stabilizing prices, as inflation has decreased to 2.5%. The Fed will also release new economic forecasts, providing insight into future rate cuts and economic conditions.

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Stock Forecasts

XLFView XLF chart on TradingView

Positive

With the anticipated rate cut by the Federal Reserve, interest-sensitive sectors such as real estate and utilities may see a positive impact, as lower borrowing costs can encourage spending and investment. Conversely, financial sectors may face pressure due to lower net interest margins.

QQQView QQQ chart on TradingView

Positive

The announcement is likely to boost market sentiment, favoring equities overall, especially growth stocks that benefit from lower interest costs. Conversely, if the rate cut is less aggressive than expected, it may lead to sell-offs in the tech sector.

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