"What news from the Feddermark!?"
FED Jan 2024 Meeting notes
For another consecutive Fed meeting, rates are staying steady. Some people were expecting rates to start dropping this month, but that isn't happening.
This means the current Fed rate is still 5.25-5.5% That also means the Prime Rate is going to stay at 8.5%. If you have no idea what that means, I talk about the prime rate extensively
Fed Chairman, Jerome Powell, also doesn't expect rates to start dropping in March. I am thinking we may start seeing rates begin dropping in early Summer, as long as inflation and unemployment data stays steady. The Fed likes what they're seeing--they just want to see more of it.
If you are in an existing variable line of credit product(credit card, HELOC, etc.), then your rate won't change for now. New fixed rates probably won't see much difference at all, depending on market competition. For example, auto rates could go down sooner because of competition, but it wouldn't be due to anything the Fed does.
The same applies to deposit rates at your bank. Banks across the board are starting to come down on savings rates. That is driven by competition and the expectation of the Fed rate coming down very soon. So, if you have a CD renewing this month, lock in a longer term to maximize your interest when rates do start dropping. I would try and go over 12 months at this point. There's nothing wrong with anything shorter than that, but you need to expect a much lower renewal rate than what you start with now.
That's the skinny on the latest Fed meeting. Take this information with you to your next neighborhood bbq and look like a sophisticated market analyst. See you after the next meeting in March.