Fed Announce No Immediate Relief to Interest Rates, But Cuts on the Way

Fed Funds Interest Rates 2024 Update

Last Updated March 21, 2024

Consumers hoping for relief from the elevated Fed interest rate will have to wait further, as The Federal Reserve announced on Wednesday it is holding steady on its 5.25-5.50% lending rate in a continued effort to combat inflation.

The 23-year-high, which peaked in July 2023, has remained unchanged following five consecutive policy meetings. Policymakers insist rates won’t be cut until the central bank is convinced that inflation will eventually fall to their 2% target. As of Wednesday’s meeting, that number stood at 3.15%, lower than the long-term average of 3.28% and well below its 6.03% pinnacle in 2023. 

The bank does anticipate change on the horizon, forecasting three cuts before the end of the year as they set a target rate of 4.50-4.75% by December 2024 and 3.50-3.75% by the end of 2025. 

The next chance for Americans to see rates eased will come following the board’s upcoming meeting between April 30 – May 1. Until then, consumers must have a plan to remain afloat with the current 5.25% rate.

What This Means for Small Business Owners

High fed fund rates are known to hit small businesses the hardest. Whether it be increased debt payments or a harder time qualifying for loans or credit, owners of startups and small businesses are constantly feeling the consequences of changes in interest rates.

altLINE Senior Vice President and General Manager Jim Pendergast urges small business owners operating on tight budgets to realize how this can affect operations.

“Business owners should remember that these heightened rates don’t only affect your borrowed funds,” said Pendergast. “They can also disincentivize your own customers who might be squeezed on funds themselves from spending on your product or service. It’s important to take that into account when making your financial projections.”

Successful small business owners are hyper-vigilant when it comes to staying on top of every little detail regarding their company. But the very best business owners understand how economic trends might impact their current and future finances.

Business owners should ensure they’re taking into account economic factors such as interest rates, inflation, or specific market trends when preparing financial statements, calculating business performance, and goal-planning. Then again, keep in mind certain measures (such as EBITDA, for instance) can be helpful to look at to gain insight into your business performance putting expenses such as interest to the side.

Finally, it’s critical to understand how to take advantage when interest rates eventually subside. It might mark an ideal time to invest in growth or expansion efforts, or to simply take measures to ensure greater stability.