When will interest rates finally start to come down? - CNBC

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When will interest rates finally start to come down? - CNBC

While no one can predict the future with absolute certainty, the consensus among experts is pointing towards a possible easing of interest rates by 2024-2025. Borrowers might find this an opportune time for loans and mortgages, while savers need to brace for potentially reduced yields.

Here are some details:

The Future of Interest Rates: Insights and Implications

Interest rates play a pivotal role in the financial strategies of both individuals and businesses. Since March 2022, the financial world has keenly observed the Federal Reserve’s move of consistently upping interest rates. Their intent? A staunch effort to rein in inflation. But with these increasing rates, a pressing question looms large: When will the rates start to descend?

The Federal Reserve’s Balancing Act

The Federal Reserve has always been in a delicate dance of trying to stabilize the U.S. economy. Amy Hubble, a certified financial planner with a Ph.D. in consumer economics, decodes the current strategy: “The Fed has two objectives: to keep inflation low, which is their primary concern now, and to maintain low unemployment rates.” This strategy has often been a teeter-totter, sometimes promoting growth and employment by dropping rates, and at other times curbing inflation by increasing them.

Expert Predictions on Future Rates

Three prominent experts shed light on the future trajectory of interest rates:

  1. Preston Caldwell, from Morningstar Research Services LLC, is of the view that the rates will likely begin their descent in early 2024. He attributes this potential shift to the Federal Reserve possibly nearing its 2% inflation target and anticipates signals of the economy slowing down.
  2. Amy Hubble references a recent FOMC report, emphasizing the projections on GDP growth, inflation, and unemployment rate. She notes, “The FOMC members unanimously believe rates will remain stable or even increase till 2023, only to gradually start decreasing in 2024-2025, stabilizing eventually at a 2.5% long-term rate.”
  3. Elliot Eisenberg from Graphs and Laughs echoes the sentiment of a potential rate drop in 2024 but advises caution for those expecting a significant dip in 2023.

Implications for Borrowers and Savers

A drop in interest rates spells good news for those eyeing borrowing avenues, as lower rates make borrowing more affordable. For instance, considering today’s steep average mortgage interest rate of 7.98%, waiting for the rates to drop before diving into a mortgage seems prudent.

However, the scenario isn’t as rosy for savers. Lower interest rates would mean that high-yield savings accounts would not offer returns as lucrative as they currently do. Banks benchmark their yields on savings accounts to the Federal rate. A decrease in the Federal rate often leads to corresponding reductions in high-yield savings accounts. 


We offer the highest level of expertise and service with integrity. Jeff Biebuyck & Dana Olmes are Luxury Homes Specialists in Calabasas with a particular expertise in representing residential estate properties throughout the West San Fernando Valley, Conejo Valley, Malibu and Greater Los Angeles area. As consummate professionals, Jeff Biebuyck & Dana Olmes provide their clients with the highest level of service to reach their unique real estate goals.

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