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When’s the next Federal Reserve meeting? What to expect — and how it affects your finances

Kelly Suzan Waggoner
Updated
When is the next Federal Reserve meeting? (Sutthipong Kongtrakool via Getty Images)

The Federal Reserve meets for its sixth two-day rate-setting session of 2024 on Tuesday, September 17, and Wednesday, September 18, 2024.

At the conclusion of its Federal Open Market Committee session on July 31, 2024, the Fed announced leaving the federal funds target interest rate at a 23-year high of 5.25% to 5.50%, marking the eighth (and likely final) time it's held the benchmark rate unchanged since July 2023. The hold is part of the Fed's continued focus on getting the inflation rate closer to an average 2%.

If all the talk of high interest rates has left you wondering what the Fed's committee does — or what the Federal Reserve even is, for that matter — here's our primer on the Federal Reserve and what it means for your future finances.

What is the Federal Reserve — and why does it meet?

The Federal Reserve is the central bank of the United States and the anchor of the country's financial system and economic health. It’s governed by a federal Board of Governors appointed by the president and confirmed by the U.S. Senate that's in charge of fulfilling the responsibilities laid out in the Federal Reserve Act of 1913, most important among them to provide the nation with a safe, stable monetary and financial system.

The Federal Reserve Act has been amended a handful of times as the country's grown and faced economic challenges. Key among them is a 1933 amendment that created the Federal Open Market Committee — or the FOMC — within the Federal Reserve, as well as a 1977 amendment establishing what's referred to as the Fed's dual mandate: "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."

The Federal Open Market Committee, which is made up of the Board of Governors and regional Federal Reserve bank presidents, meets throughout the year to review how the economy is going, analyze risks to employment and inflation and authorize monetary policy, including how the country’s money supply is managed.

At these FOMC meetings, the committee also sets the federal funds target rate cited in its dual mandate. Called the Fed rate, this rate is the benchmark that influences what U.S. banks charge to borrow money and lend money to one another — and the interest rates you’re offered on deposit accounts, loans, mortgages and other financial products.

The Federal Open Market Committee meets next on Tuesday, September 17, and Wednesday, September 18, 2024.

The federal funds rate — or Fed rate — is the benchmark rate that sets the outlook on the state of the country’s economy, and it affects the interest rates you get on deposit accounts, loans, mortgages and other financial products.

Generally, the Fed raises the federal funds rate when the economy is strong in an attempt to slow borrowing and tame inflation:

  • A higher Fed rate means you'll find increased annual percentage yields (APYs) on deposit accounts like certificates of deposit, high-yield savings accounts and money market accounts, helping you to earn more interest on your savings.

  • But it also means you’ll pay higher interest to borrow money through financial products like personal loans and credit cards. Mortgage and home loan rates don't follow the Fed rate as closely, yet when the Fed increases the benchmark rate, mortgage rates also tend to rise.

The Fed decreases the federal funds rate when the economy is sluggish, making it cheaper for you to borrow money:

  • A lower Fed rate means you’ll pay less interest on new personal loans, and monthly repayments on variable loans like adjustable rate mortgages and credit cards can become more affordable.

  • But it also means lower APYs on deposit accounts like certificates of deposit, high-yield savings accounts and money market accounts, decreasing the amount of interest you can earn on your savings balances.

Dig deeper: High-yield savings account vs. CD: What to know when rates are high

It's widely expected the Federal Reserve will announce the first of anticipated cuts to the federal funds rate at its next policy meeting on September 17 and September 18, 2024 — its first rate cut in four years. In question is how low the Fed will go: whether 25 basis points or 50 basis points. As of September 13, the CME FedWatch Tool, which measures market expectations for Fed fund rate changes, projects an 57% chance the Fed will cut rates to a range of 5.00% to 5.25%, with a 43% chance that the Fed will cut rates to a range of 4.75% to 5.00%.

Signs of cooling inflation have bolstered a September cut prediction, with economic data indicating a continued decline from a peak of 9.1% in June 2022 to rates that have ranged from 2.5% and 4% since May 2023. Economists have kept a close eye on inflation and labor reports amid speculation as to the timing of Fed rate cuts.

An eagerly awaited jobs report released September 6 showed softer job growth in August but also a rise in hiring, putting the unemployment rate at 4.2%, down from 4.3% in July. An August 21 revision to employment data indicated the labor market may have been cooling before initially thought, with 818,000 fewer jobs created from April 2023 through March 2024, stoking recession fears. The latest data allays those concerns.

Continued good news for the economy comes from the one-two punch of twin inflation reports in mid-September. The consumer price index released on September 11 showed consumer prices rose 2.5% year over year in August, down from 2.9% in July — the lowest index reading since March 2021. The producer price index released on September 12 reported a modest 0.2% increase in wholesale prices — or the prices manufacturers pay to producers of goods and services — in August from July, in line with expectations.

In prepared remarks for his keynote at the Fed's annual economic conference in Jackson Hole, Wyoming, on August 24, Federal Reserve Chair Jerome Powell said the "time has come" for the Fed to begin reducing interest rates, noting "there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market" and making it more likely a cut is to come in September.

The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on September 18, 2024, at 2 p.m. ET.

?? 2024 FOMC meeting schedule

The 2024 meeting schedule for the FOMC began on January 30, with the next session scheduled for September 17 and September 18, 2024:

The Federal Open Market Committee meets eight times a year for two days — typically Tuesdays and Wednesdays — with additional meetings added to the schedule as the economy or financial conditions require. Outcomes of these meetings, including changes to the federal funds target rate, are announced to the public at the conclusion of the FOMC meeting, with meeting minutes released about three weeks later.

The FOMC is the committee within the Federal Reserve that makes decisions around monetary policy and the open market — the buying and selling of treasury bills and securities that regulate the country's money supply.

The Federal Open Market Committee is made up of the seven members of the Federal Reserve Board of Governors and five presidents of the 12 Federal Reserve district banks:

  • Federal Reserve Bank of Atlanta

  • Federal Reserve Bank of Boston

  • Federal Reserve Bank of Chicago

  • Federal Reserve Bank of Cleveland

  • Federal Reserve Bank of Dallas

  • Federal Reserve Bank of Kansas City

  • Federal Reserve Bank of Minneapolis

  • Federal Reserve Bank of New York

  • Federal Reserve Bank of Philadelphia

  • Federal Reserve Bank of Richmond

  • Federal Reserve Bank of San Francisco

  • Federal Reserve Bank of St. Louis

These presidents act as bank CEOs responsible for setting, supervising and maintaining the monetary policy of their appointed regions — called districts. Created by the Federal Reserve Act of 1913, districts within the Federal Reserve System work together to manage the country’s money supply and how commercial banks are funded.

The seven members of the Federal Reserve’s Board of Governors and all 12 regional Federal Reserve bank presidents are welcome to attend the meetings and participate in discussions, but only Federal Open Market Committee members can vote on monetary policy.

Voting FOMC members always include the president of the Federal Reserve Bank of New York and one each from the following four bank groups, based on a rotating schedule:

  • Boston, Philadelphia and Richmond, Va.

  • Cleveland and Chicago

  • Atlanta, St. Louis and Dallas

  • Minneapolis, Kansas City, Mo. and San Francisco

  • Jerome H. Powell, Board of Governors, Chair

  • John C. Williams, New York, Vice Chair

  • Michael S. Barr, Board of Governors

  • Michelle W. Bowman, Board of Governors

  • Lisa D. Cook, Board of Governors

  • Philip N. Jefferson, Board of Governors

  • Adriana D. Kugler, Board of Governors

  • Christopher J. Waller, Board of Governors

  • Thomas I. Barkin, Richmond

  • Raphael W. Bostic, Atlanta

  • Mary C. Daly, San Francisco

  • Loretta J. Mester, Cleveland

At the conclusion of its fifth rate-setting policy meeting of 2024 on July 31, 2024, the Federal Reserve left the federal funds target interest rate at a 23-year high of 5.25% to 5.50% for an eighth straight time since July 2023.

In its post-meeting statement, the Federal Reserve said "risks to achieving its employment and inflation goals continue to move into better balance,” acknowledging “there has been modest further progress toward the Committee's 2 percent inflation objective,” but reiterated from its June statement that its rate-setting 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."

Economists estimate at least one rate cut this year with an additional four cuts anticipated in 2025.

Learn more about the Federal Reserve, its members and rates that affect your finances.

The Federal Reserve is the central bank of the U.S. that sets monetary policy and regulates the financial system to support a healthy economy for Americans and businesses. Created by Congress in December 1913, It has a mandate to increase employment and stabilize prices in order to keep inflation in check.

Among its main responsibilities are determining benchmark interest rates that affect the way consumers and businesses earn and borrow money, moderating the money available for banks to borrow and lend among themselves and regulating the open market that allows buyers and sellers to trade goods and services.

Its decisions influence how much money and credit is available to Americans and businesses, which affects how we buy homes and borrow money, grow our savings and retirement funds and take on new employment within a healthy job market.

The current federal funds target interest rate is 5.25% to 5.50%. The Federal Reserve’s Federal Open Market Committee meets eight times a year to set this benchmark, announcing any changes to the public at the conclusion of its meeting.

At its last rate-setting policy meeting, on July 31, 2024, the Fed left its benchmark funds rate, marking the eighth time it’s held rates steady since July 2023.

The annual inflation rate is a measurement that reflects how quickly the prices of goods and services have increased over a year, expressed as a percentage. It’s important because inflation affects many aspects of the economy, from decreasing the purchasing power of the dollars in your wallet, to increasing the interest rates you pay to borrow money, to increasing the prices you pay on food, gas, housing, electricity and other basic needs.

The Federal Reserve is focused on keeping the inflation rate to an average 2% — a rate it’s determined as ideal for keeping employment high and prices low. A 2% inflation rate means that the goods and services you paid $1 for a year ago would now cost you 2% more — or $1.02.

See how inflation works with the U.S. Bureau of Labor Statistics CPI Inflation Calculator, which bases its calculations on the Consumer Price Index, a widely used indicator for inflation.

Members of the Federal Reserve Board of Governors are appointed by the U.S. president and confirmed by the Senate for terms of 14 years. The Board of Governors chair and vice chair serve shorter terms of four years.

Tradition holds that members of the Federal Reserve’s Federal Open Market Committee elect the Board of Governors chair as FOMC chair and the president of the Federal Reserve Bank of New York as FOMC vice chair.

Kelly Suzan Waggoner is personal finance editor at AOL. Before joining AOL, Kelly was managing editor at Bankrate and editor-in-chief at Finder, where she led a team focused on helping people to make unfamiliar financial decisions around banking, lending, credit cards, investments and more. Kelly’s expertise has been featured in Nasdaq, Lifehacker and other publications. Today, she's dedicated to empowering those planning for, newly entering or fully enjoying retirement to get the most out of their finances — whether that’s saving money, managing debt, maximizing rewards or growing their wealth.

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