September 2024
Updated November 2024

In recent years, the U.S. economy has grappled with intense inflationary pressures, primarily sparked by the post-pandemic surge in inflation caused by a combination of supply chain disruptions, labor shortages, and rising energy costs. By June 2022, inflation had soared to a 40-year high of 9.%. To combat this, the Federal Reserve embarked on an aggressive series of interest rate hikes to stabilize the economy and curb inflation. By mid-2023, the Fed had raised rates 11 times, pushing the federal funds rate to a target range of 5.25-5.5%, the highest level since 2001.

While inflation has gradually eased since then, the Federal Reserve has kept interest rates elevated to guide inflation back toward its 2 percent target. This has led to higher borrowing costs for consumers and businesses, affecting everything from mortgage rates to credit card interest. As of September 2024, the annual inflation rate in the United States was 2.4%, marking the lowest level since February 2021. As a result, the Federal Reserve lowered the federal funds target range by 50 basis points in September, followed by a 25 basis point cut in November to 4.5%–4.75%. And although the inflation rate rose slightly to 2.6% in November, a further interest rate cut is still on the cards in December.