Countdown to the Fed’s September Meeting

Anticipation is growing for the Fed’s next two-day policy meeting, which ends on September 18, 2024.

And with good reason! If the Fed decides to cut short-term interest rates, it would be the first adjustment to be lower in more than four years.

In his August speech in Jackson Hole, Wyoming, Fed Chair Powell confirmed that “the time has come for policy to adjust.” He also indicated that the Fed is more concerned about supporting the labor market while its progress on inflation continues.

Powell’s hat tip to the labor market appears well-timed. As you can see in the chart below, the Labor Department’s August Job Openings and Labor Turnover Survey (JOLTS) fell to its lowest level in 3½ years and now sits at a ratio of 1.07 job openings to job seekers. The JOLTS update preceded a disappointing August jobs report, which showed payrolls expanded by 142,000.

Market speculators anticipate the Fed dropping rates by 0.25% at its September meeting.  Some expect the Fed to cut rates by 0.5%, but others say a more significant cut may send a mixed message about the economy with the presidential election just a few weeks away.

To me, this means buckle up for the next few weeks—in fact, buckle up for the next few months!

After the Fed meeting, the election cycle will accelerate. Historically, volatility has picked up heading into a presidential election. So, 1) stay focused on your goals. 2) Try not to let short-term price swings take you off your game. And 3) remember, I’ll keep you updated about the “comings and goings” on Wall Street.

^{The Fed’s outlook is a forecast, and forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize.}

^{CNBC.com, August 23, 2024. “Fed Chair Powell indicates interest rate cuts ahead: ‘The time has come for policy to adjust’ “}

^{CNBC.com, September 4, 2024. “Job openings fell more than expected in July in another sign of labor market softening”}

^{CNBC.com, September 6, 2024. “August payrolls grew by a less-than-expected 142,000, but unemployment rate ticked down to 4.2%”}