How the Expected 2024 Rate Cuts Could Impact Your Finances

NEWS & TRENDING - MONEY NEWS
A recent forecast by Deutsche Bank estimates aggressive rate hikes for 2024 — here's what that means for you.
Updated June 6, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Despite recent market optimism, Deutsche Bank economists have come out with a bold projection of a looming U.S. recession in 2024, accompanied by anticipated aggressive rate cuts. If this happens, what does it mean for you and how can you keep your money safe? 

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today”
  • Create your account (important!) by answering a few simple questions
  • Start enjoying your discounts and perks!

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now


If this projection materializes, it could have significant implications for your financial fitness, touching on various aspects from borrowing money for real estate to credit card opportunities and potential changes in the job market.

Deutsche Bank's 2024 projections

The economic forecast from Deutsche Bank outlines a potentially challenging scenario in the first half of 2024, characterized by two-quarters of negative growth. Brett Ryan, the bank's senior U.S. economist, suggests that this downturn could lead to a more aggressive response from the Federal Reserve, resulting in 175 basis points (1.75%) in rate cuts for the year. 

This stands in contrast to more conservative estimates from other financial institutions. For example, Michael Gapen, head of U.S. economics at Bank of America, predicts the Fed's first rate cut in June, followed by only a 25-basis point cut each quarter after that.

The Federal Reserve's current interest rates, ranging between 5.25% and 5.5%, could experience a substantial reduction if Deutsche Bank's projections hold true. Their estimate implies a potential range of 3.5-3.75% by the end of 2024, challenging the market's current consensus, which places rates at around 4.48% by December 2024, according to London Stock Exchange Group (LSEG) data.

How your money could be impacted

Lower interest rates can have a cascading effect on your personal finances, particularly in borrowing and real estate, and make it hard to grow wealth. A more affordable borrowing environment could make homeownership more accessible, potentially leading to increased demand in the real estate market. This could be good news for real estate investment trusts and property-focused fund investors.

Job Market Dynamics

Deutsche Bank's anticipated economic downturn may translate into a more competitive job market, with potential implications for job seekers and employees. The bank projects rising unemployment rates that could influence the overall employment landscape, requiring navigating potential challenges in securing or maintaining employment.

Credit card opportunities

Credit card dynamics may shift in a lower interest rate environment. Consumers may find better opportunities to take advantage of top credit card offerings as lenders begin to compete for business. This could include lower interest rates on credit card balances and potentially more attractive rewards programs.

Investment landscape

For investors, the implications are multifaceted. Bond market investors, especially those holding longer-term bonds, may experience gains as bond prices tend to rise when interest rates fall. However, those invested in short-term bonds might witness reduced yields. 

Real estate investors could benefit from increased demand, while equity market investors might need to reassess/rebalance their portfolios. Dividend-paying stocks may face increased competition, and growth stocks might become more appealing as borrowing costs decrease.

Bottom line

As Deutsche Bank's projections paint a picture of economic uncertainty, consumers should stay proactive in managing personal finances. Adaptability and informed decision-making will be key, from potential opportunities in the real estate market to shifts in the job market and alterations in credit cards. Investors, in particular, will need to recalibrate their portfolios to align with the evolving economic landscape, emphasizing the importance of diversification and strategic adjustments in the face of potential rate changes.


Choice Home Warranty Benefits

  • First month free
  • Protection for unexpected expense
  • 24/7 claims hotline
  • Network of over 15,000 technicians

Author Details

Georgina Tzanetos Georgina Tzanetos is a former financial advisor who has been active in financial media for the past six years. She holds a master's in political economy from NYU, where she studied distressed labor markets.