30. FOMC Meeting, Interest Rate Cuts & Inflation (aka Jess Watched The Fed Press Conference So You Don't Have To)

The FOMC (aka "The Fed" aka The Federal Reserve) had a press conference on March 20, 2024 where they talked about federal reserve rates remaining unchanged, but there's 3 projected interest rate cuts by end of year.

• What does this mean for our High Yield Savings Accounts interest rates, mortgages, credit cards, loans, and the economy?

• What's going on with unemployment and inflation?

• What are balance sheets and what is this balancing act that The Fed is responsible for?

• Is good news good news? Or is good news bad news? Or is bad news good news? (i.e. is a spike in unemployment good news? this and other thoughtful words from Jess ✨)

🎧 In the last episode, we talked about the balancing act the FOMC has to do between maximum employment and price stability. Basically, making sure prices are stable (interest rates on housing

🔮 We first mentioned The Fed back in Episode 6 when we discussed who they are, what they do, and why do we care. But we're still giving you a refresher today. And we've definitely mentioned them a few more times since then along with the things referenced in these episodes:

Ep. 13 The Business Cycle and Recessions

Ep. 15 Inflation Explained

Ep. 18 The Yield Curve

🌞 Jessica Inskip's Takeaways

Listen at the end for all of Jess' amazing takeaways of the FOMC meeting! Check out her TikTok for her Powell-Points

🧠 Terms/Jargon/Things To Remember

✨⁠FOMC⁠ = Federal Open Market Committee (not a government branch), responsible for managing the U.S. monetary policy, which you can read about in that FOMC link.

✨Fed Chairman = Jerome Powell (who we like to call "Papa Powell"

✨Dot Plot = thoughts about what's going to happen on a dot plot chart, but you know what's better? This FedWatch CME Tool that shows you probabilities of when interest rates might down (this chart can change at any time). We'll do a TT/Reel on how to read this and it will be in our email.

The Fed's Toolkit:

✨Interest Rate Policy

• Definition: Adjusting the federal funds rate to influence economic activity.

• Impact on borrowing, spending, and inflation.

✨Forward Guidance (Word of Mouth)

• Definition: Communication strategy about the future path of monetary policy.
• Its role in shaping expectations and market reactions with words (Swifties could probably de-code Fed speak like pros)

✨Quantitative Tightening (QT) and Quantitative Easing (QE) - This Is Where The "Balance Sheet" Comes In

• QE Definition: Buying securities to inject money into the economy.
• QT Definition: Selling securities or letting them mature without reinvestment to remove money from the economy.

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