Interest Rates: Fed Week & Navigating the Current Climate

Kristopher Cotton |

Last week was an important week for financial enthusiasts—it was Fed Week. Federal Reserve Chair, Jerome Powell, took the stage to discuss the future of monetary policy. The big question on everyone’s mind: What’s happening with interest rates?

The Fed has decided to maintain the status quo, continuing with the mantra of 'higher for longer.' Let’s dive into what this means for us and a couple of critical points about the current state of interest rates.

First off, there’s a common sentiment that interest rates are exceptionally high right now. Yes, they feel steep, especially coming off a period of historically low rates. However, when we look back through history, the current rates are actually around average. For those who remember the skyrocketing rates of the 80s, today's figures might even seem mild.

Now, onto the second point: reliance on the Fed or government to solve our financial challenges isn't a strategy we should be banking on. History shows that pinning all our hopes on governmental actions for personal financial improvement is rarely a prudent approach.

So, what can you do in light of this information? For those of us with investments in cash, CDs, bonds, and other fixed income assets, the past few years have been quite beneficial. We've been able to earn a decent return on our cash. However, with the Fed likely to cut rates—projecting one or maybe two reductions this year, aiming for a drop to about 2% by 2026—earning high returns on these investments might not be sustainable.

Given these projections, now might be an excellent time to reassess your financial strategy. Take a fresh look at the landscape and consider how you might need to adjust your investment positions to continue thriving.

If you're unsure where to start or need some guidance on your financial strategy, reach out and we’ll set up a time to do it together.

For now, take care and have a fantastic weekend!