Fed Rate Cuts: What to Expect and Why It Matters
- Davenport Real Estate Group Operations
- Sep 17
- 2 min read
After nine months of holding rates steady, the Federal Reserve is poised to cut interest rates at its September 17 meeting. With inflation still above the Fed’s 2% target but job growth faltering, this move could mark the beginning of a new rate-cutting cycle.
Why the Fed Cuts Rates
The Fed’s dual mandate is to maintain maximum employment and stable inflation. Right now, the labor market is flashing red:
Only 22,000 jobs were added in August, one of the weakest reports in years.
Unemployment is at its highest since 2021.
Revisions show job losses stretching back to June.
By cutting interest rates, the Fed lowers borrowing costs for consumers and businesses. Cheaper credit can stimulate investment, boost hiring, and support economic growth.
The Inflation Dilemma
Inflation remains above target at 2.9% headline and 3.1% core. Normally, that would keep rates higher. But with jobless claims rising and new trade and immigration policies slowing hiring, the Fed appears more concerned with recession risks than lingering price pressures.
How Big Will the Cut Be?
Most economists expect a 0.25% (25 basis point) cut this month.
A more aggressive 0.50% cut is less likely but possible if Fed officials see greater risk of a downturn.
Futures markets are pricing in two to three cuts total this year, with the next moves possibly in October and December.
What This Means for You
Homebuyers: Lower rates reduce mortgage costs, making affordability slightly better in a high-price market.
Sellers: Lower borrowing costs can bring more buyers into the market.
Investors: Lower rates often shift money back into real estate and equities, boosting valuations.
Market Insight: Rate cuts don’t guarantee an immediate housing boom, but they do set the stage for stronger activity heading into 2025.
If you’re considering buying, selling, or repositioning your assets, now is the time to review your strategy. Let’s discuss how these rate cuts can directly impact your real estate goals.
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