What if the Fed Never Cuts Interest Rates in 2024? Here's What You Should Do

Just a few months ago, most financial experts agreed that the Federal Reserve would cut interest rates in 2024. After raising interest rates rapidly in 2022, and keeping rates high throughout 2023, most observers (and even many of the Fed's decision-makers, apparently) believed that 2024 would be the time for interest rate cuts.

But as of April 10, 2024, the Fed has not cut interest rates. Is anyone else starting to feel like the Fed is just...not going to cut interest rates at all in 2024?

Let's look at the latest insights on when (or if) the Fed will cut interest rates this year, and what it might mean for your finances.

Why hasn't the Fed cut interest rates yet?

The latest consensus I'm seeing based on Bloomberg reporting is: Instead of four interest rate cuts of 25 basis points (0.25% each) for a total of 1.00% in 2024, we now might only see three cuts (0.75%) or two cuts (0.50% total). And no cuts have happened yet! June 2024 could be the soonest interest rate cuts happen, but there are no guarantees.

Why is this happening? There are two reasons why the Fed isn't cutting interest rates; one is bad news and one is good news. First, the bad news:

Bad news: Inflation is still too high

Inflation is still a little too high. The Fed wanted to see price inflation come down a bit further before it started cutting interest rates. But the latest consumer price data is still showing signs of high food prices, high oil prices, and other high prices. Part of the inflation numbers are being driven by larger global economic trends and supply chain uncertainty: the Baltimore port closure and bridge collapse could make it harder (and more expensive) to ship products to America, and ongoing conflict in Ukraine and the Middle East could keep driving up the price of oil.

But there is good news here, too:

Good news: The economy is "too good" for rate cuts

The economy is performing stronger than most analysts expected after such a long time with high interest rates. The Fed was trying to slow inflation without hurting the economy or causing higher unemployment; this ideal outcome is called a "soft landing."

Despite some ongoing trouble spots and impatience with inflation, the Fed seems to have succeeded in shepherding a "soft landing" for the U.S. economy. Unemployment is still below 4%, and wages are rising faster than inflation -- so almost everyone has a job, and lots of Americans are getting a bit richer with each paycheck, even if they don't always feel that way.

Could the Fed just…not cut interest rates at all, and leave interest rates at their current level of 5.25%-5.50%? Nothing lasts forever in economics or monetary policy. But if you were counting on an interest rate cut to make financial decisions for 2024, you might be waiting a while longer.

Here are a few ideas for money moves you can make now, even if the Fed doesn't cut interest rates in 2024.

Open a high-yield savings account

The best savings accounts are paying over 5.00% APY, and if the Fed doesn't cut interest rates in 2024, banks will keep offering those high APYs for your cash. Some people have been curious about opening a CD in 2024, based on the idea that the Fed was about to cut interest rates. But if the Fed doesn't cut rates anytime soon, that makes opening a CD a less clear-cut "good move."

There's nothing wrong with keeping cash in the bank, especially if you're earning interest that's almost as high as the best CD rates. If the Fed keeps interest rates "higher for longer," the best savings accounts are going to look even better.

Buy a home (or car) if the time is right for you

Some potential home buyers and car shoppers were hoping to see rate cuts in 2024 so their costs of borrowing would come down. If interest rates stay high on mortgages and auto loans, consumers will have less buying power. Does that mean 2024 is a bad time to buy a home or a car?

Deciding when to buy a vehicle or home is more complex than just the APR on your loan. Try to make the right decision based on where you are in your life -- if you need a more reliable vehicle to get to work, or if you're ready to move to a new neighborhood or bigger house, "now" could be the best time. Don't wait for the Fed's permission to live your life.

Keep investing for retirement

If the Fed doesn't cut interest rates, could the stock market go down? There are no guarantees either way. Stocks go up and down for infinitely complicated reasons, and investors need to just try to keep investing through all the uncertainty.

If you're a long-term investor who's trying to build wealth for the future and save for retirement, the Fed's latest moves on interest rates should not be a big part of your decisions about when and how much to invest in buying stocks.

Bottom line

The latest interest rate situation makes for constant discussion in the headlines, but unless you're a bond trader, you shouldn't let the Fed affect your daily plans. Keep putting money into the best savings accounts (or even some of the best CDs). Keep investing (and borrowing, if needed) based on your long-term goals.