Interest Rate Cuts in 2 Days: Easy Money Returns (Along with Inflation)!
Summary
TLDRThe video discusses the Federal Reserve's upcoming interest rate cut, with a 0.25% or 0.5% cut expected on September 18th. The presenter covers potential impacts on the stock market, mortgage rates, and savings accounts. While a rate cut could cause short-term market fluctuations, historically, markets trend upward in the long run. The presenter advises caution with CDs and warns that an easier monetary policy may devalue the dollar against commodities, and potentially lead to re-accelerated inflation by 2026. The labor market is predicted to remain challenging for the year.
Takeaways
- 📅 The Federal Reserve is expected to cut interest rates on September 18th.
- ❓ The decision is between a 0.25% or 0.5% rate cut, with a 0.5% cut currently favored by the market.
- 📊 Market expectations as of Monday show a 39% chance for a 0.25% cut and a 61% chance for a 0.5% cut.
- 🔮 The Federal Reserve will also provide economic projections, giving insights into future rate decisions.
- 📉 Historically, stock markets have varied in the short term after rate cuts but tend to rise in the long term.
- 🏠 The housing market is anticipated to be affected, with mortgage rates expected to drop further.
- 💵 Interest rates on savings accounts and CDs are likely to decrease as the Federal Reserve lowers rates.
- 🏦 There are currently banks offering 4% to 5% interest rates, but these rates are expected to decrease by 2025.
- 🔒 It's suggested not to lock in a CD for a long term at rates below 4%, with a preference for shorter terms.
- 💵 The devaluation of the US dollar is a complex issue and depends on comparison with other fiat currencies or commodities.
- 🚨 The speaker predicts a worsening labor market and a return of inflation due to the easy monetary policy, with 2026 expected to be worse than 2024.
Q & A
What is the expected action by the Federal Reserve on September 18th?
-The Federal Reserve is expected to cut interest rates on September 18th.
What are the two possible interest rate cuts being considered by the Federal Reserve?
-The two possible interest rate cuts being considered are 0.25% and 0.5%.
As of Monday, what are the market expectations for the interest rate cut by the Federal Reserve?
-As of Monday, there is a 39% chance of a 0.25% cut and a 61% chance of a 0.5% cut in interest rates.
What will the Federal Reserve provide on Wednesday that can give insight into future actions?
-The Federal Reserve will provide their projections on Wednesday, which will give insight into their actions in November, December, and 2025.
How does the Federal Reserve's interest rate cut historically affect the stock market in the short run?
-Historically, the stock market can go either way in the short run (3 to 9 months) after the Federal Reserve starts cutting interest rates.
What is the long-term effect of the Federal Reserve's interest rate cut on the stock market?
-In the long run, the stock market tends to go up after the Federal Reserve starts cutting interest rates.
How will the interest rate cut by the Federal Reserve impact the housing market?
-The interest rate cut will likely cause mortgage interest rates to drop further and apply inflationary pressure to home prices.
What is the expected change in interest rates for savings accounts and CDs due to the Federal Reserve's action?
-Interest rates on savings accounts and CDs are expected to go down following the Federal Reserve's interest rate cut.
What is the recommended strategy for locking in a CD rate given the expected interest rate cut?
-It is recommended not to lock in a rate below 4% and to consider terms of 3 to 9 months, aiming for 4.5% or above.
How does the devaluation of the US dollar compare to other fiat currencies in the context of the Federal Reserve's interest rate cut?
-The devaluation of the US dollar may not be significant compared to other fiat currencies as they are also moving towards easier monetary policies.
What are the two predictions made regarding the labor market and inflation following the Federal Reserve's interest rate cut?
-The labor market is predicted to remain bad for the rest of the year, and the easy monetary policy is expected to re-accelerate inflation, potentially worsening the situation by 2026.
Outlines
📉 Federal Reserve's Interest Rate Cut Predictions
The speaker provides a two-day warning about the Federal Reserve's anticipated interest rate cut on September 18th, speculating on whether it will be by 0.25% or 0.5%. Market expectations, as of Monday, suggest a 39% chance for a 0.25% cut and a 61% chance for a 0.5% cut. The Federal Reserve's projections on this day will offer insights into future rate cuts in November, December, and into 2025, indicating a continued trend of rate reductions. Historical stock market reactions to interest rate cuts are reviewed, with the video detailing short-term and long-term performances post-FED pivots. The speaker also discusses the impact on the housing market, with mortgage rates expected to drop further and home prices potentially facing inflationary pressures. Additionally, the effect on savings accounts and CDs is addressed, with the speaker advising against locking in low rates and recommending shorter-term CDs for better returns by mid-2025.
💼 Labor Market and Inflation Predictions Amid Monetary Policy Changes
In the second paragraph, the speaker discusses the Federal Reserve's dual mandate of boosting labor markets and controlling inflation. They predict that the labor market will remain challenging for the rest of the year, advising job seekers not to be overly optimistic. The speaker also warns that the easy monetary policy will lead to a resurgence of inflation, although there may be a lag before its effects are felt. They forecast a worse economic situation in 2026 compared to 2024. The speaker ends by inviting viewers to share their thoughts and encourages subscription for more content.
Mindmap
Keywords
💡Federal Reserve
💡Interest Rates
💡0.25% or 0.5% cut
💡Market Expectations
💡Fed Watch Tool
💡Stock Market
💡Housing Market
💡Inflationary Pressure
💡Savings Accounts and CDs
💡Devaluation of the Dollar
💡Dual Mandates
Highlights
The Federal Reserve is expected to cut interest rates on September 18th.
There is a 39% chance of a 0.25% cut and a 61% chance of a 0.5% cut according to the C fed watch tool.
A half-point cut is currently favored by the market.
The Federal Reserve will provide economic projections after the rate cut, offering insight into future decisions.
This rate cut marks a significant 'Fed pivot', indicating further cuts are likely.
Historically, the stock market has varied in the short term but tends to rise in the long term after rate cuts.
A video detailing how the stock market reacts to Federal Reserve rate cuts is available for reference.
If the stock market crashes, there's advice on how to prepare and what actions to avoid.
Interest rate cuts will affect the housing market, with mortgage rates expected to drop further.
Inflationary pressure on home prices is anticipated due to the rate cuts.
Interest rates on savings accounts and CDs are likely to decrease following the rate cuts.
Currently, some banks offer 4% to 5% interest rates, but these are expected to drop by a percentage point by 2025.
It's recommended not to lock in a CD rate below 4% and to consider shorter terms like 3 to 9 months.
The devaluation of the US dollar in comparison to other fiat currencies may not be significant as other countries are also easing monetary policies.
The devaluation of the US dollar against commodities is expected due to the rate cuts.
The Federal Reserve's rate cut aims to support labor markets, but the labor market is predicted to remain challenging.
The easy monetary policy is expected to re-accelerate inflation, with a prediction that 2026 will be worse than 2024.
The speaker invites viewers to share their thoughts and subscribe for more content.
Transcripts
so today is your two-day warning I want
you to know that the Federal Reserve
will cut interest rates on Wednesday
September 18th the big question is will
they cut interest rates by 0.25% or
0.5% so here are the odds according to
the C fed watch tool so this is as of
Monday the market expectation is that
there's a 39% chance that they cut
interest rates by
0.25% a 61% chance that they cut
interest rates by
0.5% so I want you to know that a half
point cut is actually favored at the
moment now I want you to know this on
Wednesday the Federal Reserve will also
give their projections so that's going
to really give us Insight a better
understanding of what they're going to
do in November December and also in 2025
because we know that this first interest
rate cut this is the Fed pivot it's
significant because they're going to
keep on cutting this is just the start
now in today's video I want to clarify
the most important aspects walking into
Wednesday so that you know what to
expect regarding the stock markets I
made a video a few weeks back showing
you historically how the stock market
reacts once the Federal Reserve starts
cutting interest rates so in that video
I cover the short run 3 months 6 months
and 9 months after the FED pivots and we
also reviewed the performance after a
few years so long story short in the
short run it can go either either way in
the long run the stock market just goes
up like if you don't believe me watch
the video it's very detailed it'll be
very helpful I will leave a link for you
down below now if the stock market does
crash I made a video to help you prepare
for that in that video I go over
specifically what you should do and what
you should not do so that's the stock
market now when the Federal Reserve
starts cutting interest rates yes that's
going to greatly affect the housing
markets so you could see it already the
mortgage interest rates in anticipation
have already started dropping but
they're going to fall even further also
it will apply inflationary pressure to
home
prices so if you want more information
about this please check out this video
so I know that this is a very important
topic for people that are looking to buy
a home right now and also for millions
of people that are looking to refinance
so I'll leave a link down below now I've
been seeing this question a lot in the
comments so if the Federal Reserve
starts cutting interest rates will the
interest rates on savings accounts and
CDs go down and the answer is yes of
course they will but the question is how
quickly are they going to fall so let me
start by just saying this if you and
most of you already know this if you
bank with a large Bank let's just say
Chase Bank they're probably paying you
what 0% or very close to 0% right but
there are many reputable Banks right now
and they're paying 4% they're paying 5%
for a savings account or a CD
and if you have money that you're just
parking for the short term for let's
just say a down payment or you know in
an emergency fund yeah it's nice to be
enjoying that 4% to 5% interest rate but
by the middle of 2025 you can say I mean
you can expect that that's going to get
knocked down by a full percentage point
so right now if they're paying 4% to 5%
I would expect it to be 3% to 4% I would
say middle of 2025 you're not going to
find any Bank that's offering 5% so if
you do want to lock in money in the CD
right now I would personally I would not
lock in a rate anything under 4% I just
wouldn't do it I would honestly look for
4.5% or above I know that many
institutions are still offering 5% or
above personally I wouldn't lock up my
money in a CD right now for anything
longer than 12 months I wouldn't even do
12 months but that's just me I would
personally look for something 3 69
months and I do want to say this because
personally this is something that really
gets me this is something I'm doing on a
day-to-day basis and it's just
completely wrong what I hear a lot of
people saying I hear a lot of people
saying that well this is going to
completely devalue the dollar okay
partially true but the question is
devalue the dollar in comparison to what
because if you're if you're going to say
it's going to devalue the dollar
compared to another fiat currency that's
not necessarily true because other
countries are doing the same thing other
countries are moving towards an easier
monetary policy they're lowering
interest rates and they're printing
money as well so if the US dollar is
devaluing but other Fiat currencies are
devaluing as well then well that
statement it's not necessarily true if
you're saying it's going to devalue the
US dollar is going to devalue in
comparison to Commodities then yeah of
course everybody knows that and here are
the last two things that I do want to
touch upon so the first thing is well
the Federal Reserve says that they're
going to cut interest rates because of
their dual mandates and this is to boost
or help the labor markets
right I guarantee you that the labor
market is going to remain bad for the
rest of the year there's not going to be
any saving here so don't get your hopes
up especially if you're in the job
market right now you're looking for a
job and number two this easy monetary
policy will re accelerate inflation it's
guaranteed to happen you're not going to
see it immediately there's going to be a
lag time but it will come back with a
Vengeance my prediction is that the
situation is going to be worse in 2026
compared to this year in
2024 so I'll see you on Wednesday please
let me know what you think Please
Subscribe I thank you for the support
and I wish you a very nice day take care
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