{"id":4603,"date":"2022-12-20T05:36:59","date_gmt":"2022-12-20T05:36:59","guid":{"rendered":"https:\/\/imsfund.com\/?p=4603"},"modified":"2022-12-20T05:36:59","modified_gmt":"2022-12-20T05:36:59","slug":"when-will-the-fed-lower-rates-again-sooner-than-you-think","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2022\/12\/20\/when-will-the-fed-lower-rates-again-sooner-than-you-think\/","title":{"rendered":"When Will The Fed Lower Rates Again? Sooner Than You Think"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\"><button class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<h2 class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/h2>\n<p><\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">Last week, the Fed raised its benchmark interest rate by\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/2022\/12\/14\/fed-rate-decision-december-2022.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">half a percentage point<\/span><\/a><span data-preserver-spaces=\"true\">, a slowdown from previous sprints. Still, the federal funds rate is at its highest since 2007. While traders are betting the Fed will begin reducing the federal funds rate in the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-12-11\/fed-message-that-rates-will-spend-some-time-on-hold-clashes-with-rate-cut-bets?srnd=economics-v2#xj4y7vzkg\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">second half of 2023<\/span><\/a><span data-preserver-spaces=\"true\">, historical trends suggest a different timeline. And while economists from major firms are split on where and when rates will peak, Fed policymakers have\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.reuters.com\/markets\/us\/will-fed-raise-hold-rates-traders-bet-they-will-not-2022-12-05\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">signaled<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0that rates will likely remain elevated until 2024.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Why the varying estimates? No one is certain how long it will take for high-interest rates to impact the job market or whether we will enter a recession. Inflation has been stubborn (albeit declining) largely due to low unemployment and supply chain issues,\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/time.com\/nextadvisor\/investing\/expert-say-how-long-will-take-inflation-to-come-down\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">experts say<\/span><\/a><span data-preserver-spaces=\"true\">.\u00a0\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">When Has the Fed Cut Interest Rates Historically?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Interest rates have peaked for an average of\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-12-11\/fed-message-that-rates-will-spend-some-time-on-hold-clashes-with-rate-cut-bets?srnd=economics-v2#xj4y7vzkg\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">11 months<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0over the last five cycles. In past rate hike cycles, however, the Fed\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.visualcapitalist.com\/comparing-the-speed-of-u-s-interest-rate-hikes\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">acted earlier<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0to tame inflation and gradually raised rates. <\/span><\/p>\n<figure class=\"wp-block-image size-full\"><picture decoding=\"async\" class=\"wp-image-146042 sp-no-webp\" title=\"When Will The Fed Lower Rates Again? Sooner Than You Think 2\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022.webp 1200w,https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-238x300.webp 238w,https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-814x1024.webp 814w,https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-768x966.webp 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" type=\"image\/webp\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022.webp 1200w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-238x300.webp 238w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-814x1024.webp 814w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-768x966.webp 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" type=\"image\/webp\"><img src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022.webp\" decoding=\"async\" loading=\"lazy\" class=\"wp-image-146042 sp-no-webp\" title=\"When Will The Fed Lower Rates Again? Sooner Than You Think 2\" alt=\"us interest rate hikes infographic\" height=\"1510\" width=\"1200\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022.webp 1200w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-238x300.webp 238w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-814x1024.webp 814w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/speed-of-interest-rate-hikes-2022-768x966.webp 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\"\/><\/source><\/source><\/picture><figcaption class=\"wp-element-caption\"><em>Comparing the Speed of U.S. Interest Rate Hikes \u2013 <a href=\"https:\/\/www.visualcapitalist.com\/comparing-the-speed-of-u-s-interest-rate-hikes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Visual Capitalist<\/a><\/em><\/figcaption><\/figure>\n<p><span data-preserver-spaces=\"true\">Since high inflation in 2022 was initially thought to be a temporary, \u201ctransitory\u201d result of the global pandemic, inflation was allowed to exceed target for 12 months before the Fed took action. This led to the fastest rate hike cycle, a rise of more than two percentage points in only six months. With inflation stickier than in the past, a longer-than-average holding period may also be required.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Fed policymakers forecast additional increases in 2023 to a range of<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cbsnews.com\/news\/stocks-down-fed-plans-more-hikes-2022-12-16\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">\u00a05%-5.25%<\/span><\/a><span data-preserver-spaces=\"true\">. Rate cuts are not expected to happen before 2024. But that\u2019s not set in stone. The Fed\u2019s own forecast clashes with trader expectations, while history seems to support the Fed\u2019s timeline. Still, a sooner decrease is possible if a deep recession takes hold, analysts say.\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">What Are Economists Expecting This Time Around?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Financial firm\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.morningstar.com\/articles\/1129548\/fed-raises-rates-again-with-a-focus-on-talking-tough\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Morningstar<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0expects inflation to turn around faster than the Fed currently forecasts, predicting rate cuts in the second half of 2023 that continue into 2024. The firm contends that the Fed is attempting to \u201ctalk\u201d the market in the direction of maintaining tight financial conditions while dropping bond yields over the last two months and slowing economic growth, suggesting the fight to control inflation will end in 2023.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Barclays initially expected rates to come down in the third quarter of 2023 as well but has pushed back the forecast to\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/markets.businessinsider.com\/news\/stocks\/federal-reserve-rate-cuts-economy-recession-hikes-stocks-powell-markets-2022-11\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">November of 2023<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0due to the resilience of inflation. But the firm\u2019s estimates remain ahead of the Fed\u2019s schedule due to a high likelihood of an upcoming recession. And Morgan Stanley continues to predict the first cut happening in\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.afr.com\/policy\/economy\/morgan-stanley-sees-lower-peak-late-2023-rate-cut-20221216-p5c6tv\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">December of 2023<\/span><\/a><span data-preserver-spaces=\"true\">. Researchers at JPMorgan Chase say the Fed could cut rates\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.jpmorgan.com\/insights\/research\/market-outlook\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">next year<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0as well\u2014but only if factors like increasing unemployment, lower inflation, and weakening economic activity converge in time.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Meanwhile, most of the investors the bank surveyed don\u2019t expect rates to fall until 2024. Economists at Goldman Sachs agree. Chief Economist Jan Hatzius says inflation has been more persistent than expected and doesn\u2019t expect\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.marketwatch.com\/story\/no-cuts-until-2024-says-goldman-economist-about-feds-likely-path-on-interest-rates-11670355514\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">rate cuts until 2024<\/span><\/a><span data-preserver-spaces=\"true\">.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Still, Bloomberg Economics is\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-10-17\/forecast-for-us-recession-within-year-hits-100-in-blow-to-biden#xj4y7vzkg\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">nearly certain<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0a recession will take hold within a year, and most\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/thehill.com\/policy\/finance\/3690846-odds-of-recession-in-next-12-months-now-63-percent-in-survey-of-economists\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">economists agree<\/span><\/a><span data-preserver-spaces=\"true\">. Some say if unemployment rises enough, the Fed may rest its attempts to hit the target inflation rate of 2% since there are\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnn.com\/2022\/12\/13\/economy\/inflation-2-demographics-climate-deglobalization\/index.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">signs<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0the inflation rate will remain above that target for the foreseeable future. In any case, future rate increases into 2023 are probable, which will impact mortgage rates as well. Even in a best-case scenario, most experts don\u2019t expect mortgage rates to come down until the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.forbes.com\/advisor\/mortgages\/move-house-now-or-2023\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">end of 2023<\/span><\/a><span data-preserver-spaces=\"true\">, and they could stay elevated into 2024 if a resilient economy requires the Fed to be more aggressive.\u00a0<\/span><\/p>\n<div class=\"is-layout-flow wp-block-group border border-gray-200 p-6 rounded-md has-slate-50-background-color has-background\">\n<div class=\"wp-block-group__inner-container\">\n<div class=\"wp-block-group__inner-container\">\n<h3 class=\"has-text-align-left mt-0\"><strong>On The Market is presented by Fundrise<\/strong><\/h3>\n<figure class=\"wp-block-image size-large is-resized\"><picture decoding=\"async\" class=\"wp-image-142373 sp-no-webp\" title=\"When Will The Fed Lower Rates Again? Sooner Than You Think 3\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-1024x252.webp 1024w,https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-300x74.webp 300w,https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-768x189.webp 768w,https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black.webp 1380w\" sizes=\"(max-width: 256px) 100vw, 256px\" type=\"image\/webp\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-1024x252.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-300x74.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-768x189.png 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black.png 1380w\" sizes=\"(max-width: 256px) 100vw, 256px\" type=\"image\/png\"><img src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-1024x252.png\" decoding=\"async\" loading=\"lazy\" class=\"wp-image-142373 sp-no-webp\" title=\"When Will The Fed Lower Rates Again? Sooner Than You Think 3\" alt=\"Fundrise logo horizontal fullcolor black\" height=\"63\" width=\"256\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-1024x252.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-300x74.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black-768x189.png 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/Fundrise-logo-horizontal-fullcolor-black.png 1380w\" sizes=\"auto, (max-width: 256px) 100vw, 256px\"\/><\/source><\/source><\/picture><\/figure>\n<p class=\"mb-0\" style=\"font-size:16px\"><strong>Fundrise is revolutionizing how you invest in real estate.<\/strong><\/p>\n<p class=\"mt-0 has-slate-600-color has-text-color\" style=\"font-size:16px\">With direct-access to high-quality real estate investments, Fundrise allows you to build, manage, and grow a portfolio at the touch of a button. Combining innovation with expertise, Fundrise maximizes your long-term return potential and has quickly become America\u2019s largest direct-to-investor real estate investing platform.<\/p>\n<p><a href=\"https:\/\/t.sidekickopen84.com\/s3t\/c\/5\/f18dQhb0S7kF8cpngfW16gy-_59hl3kW7_k2841CX6NGN35Qwt3rN_mgW56Jw3w1HcgXpf197v5Y04?te=W3R5hFj26QkH2W4hJTY63T3pkxW3Fbt5S3Cdl5cf49M_4s04&amp;si=8000000019411002&amp;pi=6988e0ed-1aea-4af5-9769-8a0de4675eeb\" the=\"\" market=\"\" blog=\"\" sponsor=\"\" click=\"\" referrer:=\"\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Learn more about Fundrise<\/a>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/when-will-the-fed-lower-rates-again\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article Last week, the Fed raised its benchmark interest rate by\u00a0half a percentage point, a slowdown from previous sprints. Still, the federal funds rate is at its highest since 2007. While traders are betting the Fed will begin reducing the federal funds rate in the\u00a0second half of 2023, historical trends suggest a different [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":4604,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/federal-reserve-1-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-4603","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=4603"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4603\/revisions"}],"predecessor-version":[{"id":4605,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4603\/revisions\/4605"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/4604"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=4603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=4603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=4603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}