One thing: Hold your horses

One thing: Hold your horses

One thing you need to know about market movers and shakers, plus a handful of headlines.  


One thing that moved markets  

... is Federal Reserve Chairman Jerome Powell’s two-day testimony to congress. To cut or not to cut, that is the question. 

Delivering the central bank’s semiannual Monetary Policy Report, the Fed Chair covered interest rates, inflation, and the state of the U.S. economy. 

In prepared remarks, Powell reiterated that the Federal Open Market Committee does not expect rate cuts until it’s confident inflation is moving sustainably toward a 2% target. Powell added that premature cuts to rates run the risk of reigniting inflation or even opening the door to additional rate increases.  

That said, Powell also acknowledged the risk to economic growth if rates remain high for too long. Ultimately, he does expect the central bank to cut interest rates in 2024 but avoided giving a definitive timeline as the committee maintains its data-dependent approach to policy.1  

How we've seen progress on inflation 

Inflation hit a multi-decade high of 9.1% in June 2022.2 Since then, the Fed has remained adamant about a goal of returning inflation to 2%, and its primary tool for accomplishing that is raising the federal funds rate, which influences the cost of borrowing across the U.S.  

The central bank has raised interest rates 11 times since March 2022, bringing the federal funds rate to its own multi-decade record of 5.25-5.5%, where it has held steady since mid-2023.3 

In response to this tighter monetary policy, inflation has steadily retreated to roughly 3%.4 But the last mile to 2% is proving to be more challenging, and the Fed doesn’t want to prematurely declare victory by cutting rates too early. 

Why upcoming data is important 

With the Fed exercising patience, the market’s expectations of an imminent rate cut have been tempered. The Fed’s dot plot released at the end of 2023 suggested there could be three cuts in 2024.5 At the start of the year, Wall Street expected four to six rate cuts in 2024, per the CME FedWatch Tool.6

How this impacts markets and the economy 

In the meantime, higher rates can impact interest-rate-sensitive assets like real estate, especially as refinancing deadlines come due later in the year. On the flip side, they also typically lead to attractive returns on cash, providing a low-risk opportunity to earn upwards of 5% on APY through high-yield cash accounts and similar savings tools. 

For consumers, higher rates mean mortgages, auto loans, and credit card debts cost more. 

On a macro scale, this could be a headwind for consumer spending, which accounts for roughly two-thirds of U.S. GDP growth.7  

High interest rates can also be challenging for businesses, often leading to layoffs or other cost-cutting measures. 

What consumers should be thinking about 

As the Fed awaits proof the inflation rate is returning to 2% and likely to stay there, monitoring economic data over the next several months can help gauge pricing trends and economic strength. 

If inflation continues its trajectory back to 2% over the next few months, at least one rate cut in 2024 remains highly likely. However, if inflation accelerates or stubbornly hovers around 3%, the Fed’s policy path remains to be seen. 

And a few top headlines  

  1. Google-backed generative AI startup Anthropic debuted a new chatbot and suite of AI models.8 The most advanced of these reportedly outperformed OpenAI’s GPT-4 and Google’s Gemini Ultra on industry benchmarks. 

  • If you or your business leverages AI for productivity, this new model could significantly improve output. 

  1. Costco is replacing its $9.99 roast beef sandwich food court item with a $6.99 turkey Swiss sandwich.9 

  • Compared to its other food items, Costco’s roast beef sandwich was on the higher end of the low-cost menu; as the cost of many food items have gone up, some menu items are going down. 

  1. Target announced a paid membership program similar to Amazon Prime, giving customers free same-day delivery on orders of more than $35.10  

  • Major retailers are competing with Amazon’s fast delivery system, giving consumers more options. 

  1. Salesforce announced a new suite of AI solutions for healthcare workers to help with booking appointments, summarizing patient information, and sending referrals through conversational prompts.11 

  • This could streamline administrative tasks across the healthcare industry, potentially increasing efficiency for employees and employers in the industry.  

  1. The TSA is experimenting with a new self-service screening system at the Las Vegas airport to make travel more efficient as high post-pandemic travel demand continues.12 

  • The average person who uses Empower Personal DashboardTM put $1,346 toward travel in January. As the highest category of credit card spending, travel may at least become more of a breeze with the TSA’s new system designed to reduce overall travel time.

What to be on the lookout for next week 

Next week, we’ll get a new batch of inflation data with February’s Consumer Price Index (CPI). Stay tuned. 

Get the scoop on your money.

Stay current on planning, saving, and investing for life.

1 Barrons, “Jerome Powell Says Rate Cuts Will Begin This Year,” March 2024. 

2 U.S. Bureau of Labor Statistics, “Consumer prices up 9.1 percent over the year ended June 2022, largest increase in 40 years,” July 2022. 

3 Bankrate, “Fed’s interest rate history: The federal funds rate from 1981 to the present,” January 2024. 

4 U.S. Bureau of Labor Statistics, “Consumer Price Index Summary,” February 2024. 

5 New York Times, “How to Read the Fed’s Projections Like a Pro,” December 2023. 

6 Business Insider, “How many times will the Fed cut rates? Here's what Wall Street expects for the key stock-market driver in 2024,” December 2023. 

7 Congressional Research Service, “Introduction to U.S. Economy: Consumer Spending,” July 2022. 

8 U.S. Bureau of Labor Statistics, “Consumer Price Index,” February 2024. 

9 CNBC, “Anthropic, backed by Amazon and Google, debuts its most powerful chatbot yet,” March 2024. 

10 CNBC, “Target launches paid membership program as it chases new revenue streams,” March 2024. 

11 CNBC, “Salesforce announces new AI tools for doctors,” March 2024. 

12 CNN, “The TSA’s new experiment: Self-service security checks,” March 2024. 


The Currency editors

Staff contributors

The CurrencyTM, a publication from Empower, covers the latest financial news and views shaping how we live, work, and play. We keep you current on ways to plan, save, and invest for life.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.