Fed meeting live updates: Powell set to lower rates again, but will the Fed be able to cut in 2025?

The Fed is expected to cut interest rates again. What comes next is the biggest question.

There’s a phrase that we Federal Reserve reporters use so much when describing Fed meetings that it might as well be a central banking cliche at this point: What matters most isn’t today’s interest rate announcement, but what the Fed suggests could come next. 

It’s perhaps the most relevant way to describe the Federal Reserve’s final interest decision of the year (releasing today at 2 p.m. ET).

Fed officials are already widely expected to cut interest rates for the third time at their December meeting. Most economists and investors expect it because Fed officials made no effort to walk back those expectations leading up to today’s gathering, even after the latest data revealed that inflation has been stubborn and the job market has been stable. 

What’s been missing, though, is evidence of a unified consensus on what the future could hold. Here are the key areas that are going to be most important to watch at the Fed’s final meeting of the year:

Could the Fed imply that it plans to skip a few rate cuts? Powell has said the data isn’t compelling officials to be in a rush with interest rate cuts. Officials are set to update their quarterly Summary of Economic Projections (SEP), which will reveal where they expect borrowing costs could head over the course of the next three years. Should officials project fewer than four rate cuts for 2025 (what they estimated back in September), it could signal that Fed officials think they’ll need to leave rates unchanged at multiple meetings — a far slower pace than what’s been happening over the past few months. 

Will Fed officials stress that their outlook is even more uncertain? Fed officials are likely going to be even more guarded than usual with the guidance that they give. There’s a lot of uncertainty about what the path for inflation and the economy could look like next year. President-elect Donald Trump’s proposals to raise tariffs on U.S. imports and lower taxes could lead to higher inflation, economists say. Powell, however, will continue to stress that it’s too soon for the Fed to change its tune.

Get ready for the Fed’s December meeting

The Fed is poised to cut interest rates again. Here’s what to watch.

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The U.S. economy remains resilient, but cracks are forming underneath the surface

There’s something for everyone in U.S. economic data these days. Economists have just as much to make them feel gloomy (unemployment is rising, it’s taking longer for Americans to find new positions) as upbeat (that once widely forecasted recession has yet to rear its ugly head, and the economy continues to grow despite the Fed hiking rates to the highest level in 23 years). That mixed picture is part of the reason why Fed officials are finding their next moves uncertain and tricky. 

Here’s the latest snapshot of the U.S. economy: 

• Unemployment rate (November): 4.2%, remaining near 2021 highs and up from a half-century low of 3.4 percent (from April 2023)
• Inflation rate (November): 2.7% (up from 2.4% in September but down from a peak of 9.1% in July 2022) 
• Gross domestic product (Q3): 2.8% (1.8% is currently viewed as a “goldilocks” level of growth)
• Retail sales (November): up 4.1% from a year ago, fastest since December 2023

Read more on Inflation slightly accelerated last month — here are the prices rising most.

As the Federal Reserve prepares to lower interest rates for the third consecutive time, CD rates will continue to ease off the highs we saw in 2023. But if you act quickly, you can still snag some great returns: 

• Shop around and look beyond the biggest banks. Online banks and credit unions often pay much higher rates than the megabanks.
• Yields are likely to keep falling in the coming weeks as banks adjust to the new rate environment. The sooner you lock in, the better.
• Building a CD ladder with different maturity dates allows you to take advantage of higher long-term rates while still giving you some access to your cash.

The key is to be proactive and strategic in finding places to store your cash.

If you’ve got a big expense looming for 2025 — like a new fridge, international flight or cosmetic procedure — you might wonder if the Fed’s rate cuts affect when you should borrow money to pay for it.

Don’t bank on credit card interest rates dropping enough to make it worth carrying a balance for a big purchase — a credit card is still an expensive form of debt. I’d only suggest applying for a 0 percent intro APR card and paying it off before the intro period ends.

But keep an eye on things like personal loans and buy now, pay later (BNPL). Personal loan rates might drop over time as it becomes more affordable for banks to lend you money. The cuts may also increase your chances of getting a 0 percent BNPL plan.

The best way to fund a big purchase is to start saving ahead of time. Even if high-yield savings account rates drop, it’s still better to earn money on top of your money — rather than paying to borrow it.

Home values keep increasing, and that trend has been reflected in the ever-rising loan limits for so-called conforming mortgages. For much of the U.S., the divide between conforming loans and jumbo mortgages in 2025 has increased to $806,500 — a 5.2 percent step-up from the 2024 limit of $766,500. In pricier places like New York City, Alaska and Hawaii, the limit has increased to just over $1.2 million.

Major indexes were slightly higher ahead of the final Fed rate decision of the year

• Stocks were a bit higher Wednesday morning as investors anticipated the Federal Reserve’s interest rate decision. Inflation remains above the Fed’s 2% target. There’s been some discussion that President-elect Donald Trump’s policies regarding trade, immigration and taxes could continue to fuel economic growth. 
• The Dow Jones Industrial Average was up slightly. The S&P 500 and Nasdaq were also somewhat higher.
• Treasury yields also inched up, with the 10-year Treasury yielding around 4.41%.
• Bitcoin declined to $104,000, down from its recent record high of $108,000.
• The U.S. dollar index rose 0.06%.

Senior Industry Analyst Ted Rossman speaks with CNN’s Vanessa Yurkevich to discuss the relationship between Fed rate cuts and credit card interest rates.

What does a third interest rate cut mean for credit card borrowers?

Bankrate's Rossman shares tips on what Americans with credit card debt should do ahead of the Fed's December meeting.

Watch here

The rates on fixed-rate home equity loans and variable-rate HELOCs haven’t been this affordable in more than a year, and with the Federal Reserve set to continue rate cuts, now might be a good time for homeowners to tap their equity with one of these loans.

A HELOC works just like a credit card, allowing you to borrow what you need during the draw period, then repay it over time with interest over the repayment term. A home equity loan gives you a lump sum with fixed payments. Both of these options involve putting your home on line as collateral. 

Two factors to consider are where rates are headed and your own financial goals

Ultimately, the right CD term for you when rates are dropping depends on both your expectations and your goals. When it comes to APYs, shorter-term CDs are currently out-earning longer-term ones. Plus, shorter-term CDs allow you to reinvest the funds sooner for a more competitive yield if APYs start to increase in the meantime.

On the other hand, locking in a longer-term CD now could possibly better hedge against further rate drops by guaranteeing a competitive APY for longer.

Regardless of where the market might be headed, don’t forget to factor in when you’ll want access to the money again (such as for a planned purchase or reinvestment), as most CDs charge a penalty for early withdrawals. As a rule of thumb, always keep money earmarked for emergencies in a place that’s more accessible, such as a high-yield savings account.

Used strategically, balance transfer credit cards can save you hundreds on interest charges

All this talk about interest rates may have you thinking about consolidating some existing credit card debt. A balance transfer card can be a handy financial tool to give you some wiggle room in your budget. Many of them offer at least a year of 0 percent interest, with the best cards presenting up to 21 months with an intro APR — nearly two full years to get caught up.

They’re useful as long as you make a plan to pay off your balance before the promo rate expires, otherwise you’ll be right back where you started. A few are even worth keeping as daily-use cards because of rewards and other ongoing benefits. Here’s how to choose a balance transfer card to save on interest in the new year. 

Bankrate’s Sarah Foster breaks down the biggest questions surrounding the Fed’s final rate-setting meeting of the year and what comes next. 

@accidental.economist

💡 What prediction or trend in finance and the economy do you expect to have the biggest impact in the next 12 months? And why?

♬ original sound – Sarah Foster

As we gear up for what’s likely to be another Fed rate cut, let’s look back on the ride mortgage rates took this year. For most of 2024, the average 30-year fixed-rate loan hovered near the 7 percent mark, hitting a high in May at 7.39 percent, and a low in September at 6.20 percent.

That’s pretty in line with the historical norm of roughly 7.2 percent:

While homebuyers might be wishing for the lower rates of the past, keep in mind, more Fed cuts might not drive them back down significantly. Here’s more on historical mortgage rate trends, plus some predictions for 2025.

Chief Financial Analyst Greg McBride, CFA, joins Local News Live to explain the impact of a potential third rate cut in 2024.

'Rates are coming down much slower than they went up'

In the year ahead, Fed officials are going to cut interest rates at a slower pace, McBride says.

Watch here

Another rate cut could heat up an already hot stock market

An interest rate cut by the Federal Reserve is generally positive news for stocks and other investments. 

Here’s why:

• Lower rates make borrowing cheaper for businesses, reducing their interest expenses and freeing up capital for dividends or stock buybacks. 
• A rate cut can also push stock prices higher, even without immediate changes in fundamentals. 
• Low rates make safer investments like CDs less attractive, leading investors to seek higher returns in riskier assets like stocks or cryptocurrencies.

Pretty much every financial decision you make comes back to what’s happening at the Federal Reserve — but its work is mind-bendingly complex. Here are the key ways the U.S. central bank shows up in your financial life: 

1. Borrowing costs: The Fed’s interest rate decisions have a domino effect on almost all forms of borrowing. When rates rise (or fall), so, too, do borrowing costs on auto loans, credit cards, home equity lines of credit (HELOCs) and more. Fewer rate cuts, however, could bring borrowers less relief from a historically pricey era for financing big-ticket purchases. 
2. Savings yields: Lower rates also mean lower returns on your savings, but the Fed keeping interest rates higher for longer has been better news for savers than borrowers. Yields have already edged lower, but not as much as what was originally anticipated. Meanwhile, the highest-yielding banks on the market are still offering yields that eclipse inflation — a trend that’s expected to continue. 
3. Job security: One of the biggest corners of the economy impacted by higher interest rates is the job market. Expansions that seemed wise when money was cheap might be put on the backburner. New opportunities made possible by low interest rates are no longer on the table. If the Fed keeps interest rates too high for too long, it risks needlessly slowing down the economy or even forcing job cuts. Fear of a slowdown in the job market was part of the reason why Fed officials cut borrowing costs half a percentage point in September. 
4. Purchasing power: The Fed is cutting interest rates cautiously to make sure that it can keep weighing on inflation — or worse, to ensure it doesn’t reinvigorate price pressures. Expensive rates can cause both businesses and consumers to pull back on big-ticket purchases or hiring — and that loss of demand is ultimately what leads to a lower pace of price increases. 
5. Investments: High rates tend to weigh on stocks, as companies find it harder to finance expansions and investors grow wary of a broader economic slowdown. Yet, stocks this year have been “defying gravity,” with the S&P 500 surging almost 28 percent as the U.S. economy continued avoiding a recession in 2024. Still, volatility is to be expected. Keep focused on the long term, and tune out any day-to-day gyrations. Downdrafts in the market can be a significant buying opportunity for your retirement savings.

The Fed today is set to publish an update to its quarterly Summary of Economic Projections (SEP), a closely dissected chart that clues investors, consumers and economists into where each official expects interest rates to head over the next few years, currently through 2027. 

Its last update in September projected that the Fed planned to cut interest rates four times in 2025. But given recent statements from Powell highlighting higher inflation and a stronger economy than previously anticipated, officials could very well revise those estimates to show fewer cuts.

You might be able to read between the lines (or should I say, connect the dots?!). For instance, Fed officials have eight meetings scheduled for next year, meaning four rate cuts suggest that the Fed expects to reduce borrowing costs at every other meeting. Fewer than that, however, might imply an extended pause.

Reading the Federal Reserve's economic projections

The Fed's projections offer important clues about the future, but they can be confusing. Here's how to decipher them.

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