May 15, 2024

The Ongoing Saga of Interest Rates?

Inflation continues to challenge interest rate forecasters. From a historical perspective, many experts predicted a decline in rates where a rapid increase ensued; And in just the last sixty days, financial press coverage has been all over the place. There were many who anticipated rate cuts, however, the focus being not ‘if’ rates would be cut, but on ‘how many’ rates cut we would see in 2024.

“They’ve got the economy right where they want it... The question is, what’s the bar here...,” said Mark Zandi, Chief Economist at Moody’s Analytics. “My sense is they need two, probably three consecutive months of inflation numbers that are consistent with the 2% target. If that’s the bar, the earliest they can get there is September. I do not see rate cuts happening before that. Right now, my base case is two — one in September and one in December, but I could easily see one rate cut, in November,” said Zandi, who thinks the presidential election could factor into the equation.

As we approach the election, expect a political response to the interest rate saga. History has shown that reacting proactively to press and media is not the best response. We must remain vigilant regarding our personal financial health and confident in our long-term plan.

What can you do to make the most of current economic conditions?

Take advantage of the financial institution offerings of high interest rates for short-term deposits. There are currently opportunities of more than 5% yield for six-month terms, many with no penalty for early withdrawal. These offerings provide amazing flexibility and the highest guaranteed yields we have seen in a long time.

Avoid adding to your debt levels. We’re paying significantly more to borrow money right now. Aim to pay off your credit cards and other loans before they are due to ensure you aren’t incurring any additional interest or late payment fees.

Schedule time to meet with a coach and carve out a plan. If paying off debt is at the top of your list of financial to-dos, we got you. Consider meeting with a Life. Money. You.® Certified Financial Coach – one of many program perks 100% free of cost to you. Schedule time with a coach now.

Stay confident and good luck!

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