The big announcement coming out of the Federal Reserve as we do know will impact all of us in some way, shape or form, as they have been in aggressive campaigns over the last year.
The Fed is wrapping up their two-day Federal Market Open Committee (FOMC) meeting, which is a meeting that they have every six weeks where all of these economists get together, and they come forward and they decide what is going on with the economy.
This will be their last meeting for 2023, but there will obviously be more for next year, 2024.
We heard from the Fed and they are leaving rates as is. And it appears that the Fed has been showing weakness and has lost the narrative — people are expecting for the Fed to start cutting rates in 2024 — and we know what comes after cutting; they will start printing money and the debasement of currency will continue, and risk-on assets will continue to rise.
Read: Federal Reserve Pauses Interest Rate Hikes, Remains At 5.25%-5.50%
Fed’s Aggressive Campaign
The Fed has been on this very aggressive campaign since March of 2022 raising interest rates to bring down inflation. Basically, it doesn’t really matter where you are getting credit from. You could be getting a mortgage on a 30-year fixed rate, you could be borrowing money on a credit card, you could be getting an auto loan, interest rates are through the roof right now.
The whole logic behind increasing interest rates is to decrease the appetite for borrowing and spending money. So, during this time right now when interest rates are so incredibly high, we probably do not want to borrow that much money because it is so incredibly expensive versus a few years ago when we could go and get a 30-year fixed rate mortgage for less than 3%.
As a result of that, a lot of people are pulling back and not spending as much on discretionaries because prices have gone up so substantially.
Lowering Interest Rates In 2024
The expression you will sometimes hear people in the media use is “the Fed fell behind the curve,” the curve they are talking about is the interest rates — the cost for banks to borrow money from each other.
Eventually, the Fed corrected and caught up to the curve and that is when you might remember the US broke a couple of banks in March 2023.
Read: The US Banking System Is Crumbling – Is Bitcoin The Life Raft We Need?
But now the critique is that the Fed is making the same mistake, but in reverse. They are behind the curve in lowering interest rates because if they hold the rates too high for too long, it could cause a hard landing or for the US to go into a deep recession.
So the market is predicting that if the economy slows down (which is exactly what it’s doing), the Fed’s hand will be forced and they will have to lower interest rates as many as five times next year. The Fed will be forced to start quantitative easing and the buying up of assets — printing money — which is beneficial for Bitcoin and any asset that has a fixed limited supply.
Now, economists also say that even if the economy gets way stronger, the Fed will still have to lower interest rates and that is because if they do not, it could cause a classic recession thanks to the business cycle, the rising cost of debt, and higher unemployment which is what we are seeing now.
2024 Is US Election Year
When you combine all those reasons with the fact that next year is also an election year, and you have even more pressure for the Fed to lower interest rates to make sure the economy is doing well.
Even though the Fed’s job is to stay out of politics and stay completely neutral, people say that humans will always be human and they will always have a preference. All those reasons add up to the fact that the Fed will probably lower interest rates sooner than people think.
Q1 2024
Economists are also predicting over a 50% chance that the Fed will lower the rates for the first time by a quarter percent sometime in March 2024. As we get closer to that date, keep an eye on that chart because most likely the probability of them lowering rates will go up even more.
Final Thoughts
We need to continue watching the Fed closely and seeing what they are going to be doing for 2024, and we all know that it has been making things a lot more expensive and making things even harder for all of us.
It might seem like it is not really a big of a deal for most people, but actually it is — it will impact all of us because this just simply means what is going on with the economy, money, debt and interest rates. All of these things are all being determined by the Federal Reserve.
We have to watch this closely as well because this could be another factor that really collapses the economy even more than what the contractions are that we are already seeing.