Inflation numbers cooled again in September, reinforcing expectations ofanother interest rate cutat next week’s Federal Reserve meeting.
The Fed’s preferred inflation indicator rose 2.1% annually in September, as expected.
Many expected higher interest rates to trigger a slowdown in the economy as borrowing became more expensive.
But unemployment has remained relatively low at 4.1% and consumer spending has stayed strong.
Core inflation, which excludes food and energy, rose 2.7% annually.
Although overall inflation has continued a downward trend, core inflation has remained stubbornly strong throughout the summer.
Housing and health care costs continue to be the biggest contributors to higher prices.
So what do the latest inflation numbers mean for your finances for the rest of 2024 and beyond?
Why does inflation matter?
Inflation measures how much prices are rising for goods and services.
Inflation isn’t necessarily bad.
The Fed started raising interest rates in early 2022 to make a run at bring inflation back under control.
A CNET survey found the majority of people aremaking sacrifices this holiday seasonto keep their spending in check.
Pro tip:If you’re struggling to break free of the paycheck-to-paycheck cycle, check out theseexpert tips.
When will we get relief from high interest rates?
Most experts anticipate more interest rate cuts in 2025.
If all goes as expected, we could see long-term easing ofmortgage ratesandcredit card APRsin 2025, experts predict.
However, your interest rate on saving products likeCDsandhigh-yield savings accountsalso drop when the Fed cuts rates.
