Next Fed Meeting: What May Happen in September? (2024)

The next Federal Open Market Committee (FOMC) meeting will be held on September 17-18, 2024. This is one of the key dates that investors, economists, and policymakers mark on their calendars.

Some experts expect the Fed to hold rates steady at a target of 5.25%-5.50%, as the Fed still waits for inflation to ease a bit more to its 2% target. There is speculation among traders on the likelihood of a cut of between 25 and 50 basis points in September.

The FOMC is the Federal Reserve System's monetary policy-making arm, and its decisions have far-reaching implications for the U.S. economy. Meeting eight times a year, and occasionally more if the situation demands, the FOMC deliberates on the nation's interest rates and other financial policies. These decisions influence everything from the rates you get on your savings account to the cost of borrowing for homes and businesses. So, when the FOMC speaks, people listen.

The Latest Fed Moves

During the most recent FOMC meeting held on July 30-31, 2024, interest rates were kept unchanged at 5.25%-5.50%.

This was expected, as it gives the Fed additional time to evaluate if the current rates keep inflation at bay without hampering economic growth too much. The tone of the last meeting's minutes maintained a bit of a hawkish tone, re-stating that "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent." Indeed, the Fed now hints that perhaps only one rate cut will occur in late 2024. This is a change in language from the meetings held toward the end of 2023, when the FOMC had signaled that at least three rate cuts could be in the cards for 2024. Indeed, the Fed has indicated that inflation remains a key concern, and government reports show thepace of inflation remains stubbornly high. Market expectations going into the May meeting were, therefore, somewhat muted that the Fed would cut.

During the 2022-2023 cycle, the Fed increased rates 11 times to slow inflation but has held rates steady at 5.25%- 5.50% since July 2023. Indeed, after the September 2023 meeting, Fed ChairmanJerome Powellhinted that one more hike before 2023 was still on the cards. That, however, did not come to pass, as the Fed's aggressive rate hiking campaign in 2022-'23 seemed to have already done the job. Whether that sticks remains to be seen.

Still, Powell reiterated that no definitive decisions about the future have been made, that the Fed will continue to take it meeting by meeting, and that they would be willing to hold rates steady for as long as needed.

What Happens at Fed Meetings?

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System, the central bank of the United States. The FOMC holds eight regularly scheduled meetings during the year and may hold other meetings as needed to set emergency short-term interest rates or implement other policy tools.

The FOMC consists of 12 members: the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis. At each FOMC meeting, the members review economic and financial conditions, determine the appropriate stance of monetary policy, and assess the risks to its long-term goals of price stability and sustainable economic growth.

The FOMC issues a statement after each meeting summarizing its assessment of theeconomyand policy decisions. The statement also includes an implementation note providing operational details on how the policy decision will be carried out. The FOMC also publishes its Summary of Economic Projections (SEP) four times a year, showing the members’ forecasts for key economic variables over the next three years and their views on the appropriate path of the federal funds rate.

The FOMC meetings are closed to the public but are recorded and transcribed. The minutes of each meeting are released three weeks after the date of the policy decision. The transcripts are released with a five-year lag.

Next Fed Meeting: What to Expect in September

The Federal Reserve will hold its next policy meeting on September 17-18, 2024, and analysts had initially expected the central bank to continue to hold rates steady. However, bearish sentiment and a series of sharp down moves in stocks has led many traders to now price in a rate cut by September, with futures markets pointing to a 65% of a 50 basis point (bps) reduction and 35% to 25 bps, according to the CME's FedWatch Tool.

Persistent high interest rates can negatively affect the banking sector, stock market, and trade generally. These factors, plus moderating inflation, could weigh on its upcoming rate decisions, so futures markets now point to an 80% chance that by the end of the year, rates will be in the 4.25-4.50% range or lower.

Of course, this will all depend on the trajectory of inflation and the state of the economy. The Fed’s policy moves ultimately depend on what economic data show in the coming weeks, including measures of inflation, employment, andproductivity. The Fed will also monitor credit conditions, the financial markets, and global developments closely.

The Fed aims to achieve a soft landing for the U.S. economy while balancing its dual mandate of maximum employment and price stability. The Fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the U.S. dollar.

Most Recent Fed Meeting (July 30-31, 2024)

During the latest FOMC meeting decision, released on July 31, 2024, the Fed again held rates steady at 5.25-5.50%, continuing a pause from an aggressive rate-hiking campaign that began in March 2022 to fight rising inflation. The Fed also signaled that it was willing to keep rates steady until it sees inflation moderating toward its 2% target. While inflation has moderated somewhat, the Fed has indicated that it will continue to proceed carefully as it monitors the economy and continues to unwind its balance sheet to reduce its holdings of treasuries, agency debt, and mortgage-backed securities (MBS).

The market widely expected the Fed’s decision to hold rates steady following a series of rate hikes that culminated in July 2023, which followed another decision to hold rates steady in June, as the Fed left the door open to resuming rate hikes again if inflation didn't moderate. The Fed had raised rates almost a dozen times since early 2022-'23 to cool the U.S. economy and battle inflation rates that peaked at more than 9% last year. The Fed’s rate-hiking campaign has been the most aggressive since the 1980s, and it sparked some turmoil in the banking sector, the stock market, and the global economy. However, rates at around 5.50% are still less than half of their 1980s peak.

The Fed reported that the American economy remains strong and the labor market resilient--but also acknowledged that the pace of growth had slowed down compared to 2023.

As usual, the Fed reaffirmed its commitment to achieving itsdual mandateof maximum employment and price stability and said that it will act as appropriate to sustain the expansion. The Fed’s policy moves depend on what economic indicators, including theConsumer Price Index (CPI),payrolls, andgross domestic product (GDP) growth, indicate for the coming weeks and months.

Fed Meeting Calendar

The FOMC meets regularly eight times a year. The table below shows the calendar from December 2022 thru 2024, and how the Fed decided on interest rate hikes.