When I was a daily newspaper reporter during the early 1980s, the web didn’t exist. There were no laptops or smartphones. I interviewed sources either in person or on a “Ma Bell” landline telephone.

The daily news was delivered to readers on actual paper. We had a sardonic expression in the newsroom: Today’s news is tomorrow’s fish wrap.

At the end of its two-day meeting Wednesday, the Federal Reserve’s policy-making Federal Open Market Committee (FOMC) announced that it would leave the federal funds rate unchanged at 5.25%-5.50%.

No one was surprised. The CME Group’s FedWatch tool this week had put the odds of a pause at 99%. The FOMC’s latest decision already is fish wrap.

Markets are forward looking and investors are assessing what’s likely to happen at the FOMC’s November and December meetings, as well as the prospect of interest rate cuts in 2024.

Read This Story: How to Build Your Own “Profit Dashboard”

The FOMC temporarily ceased hiking interest rates, due to economic deceleration and the cooling of inflation.

At his late afternoon press conference Wednesday, Fed Chair Jerome Powell said: “Today’s decision doesn’t mean we have decided that we have or have not at this time reached sufficiently restrictive stance.”

Stocks at first were trading sharply higher after the FOMC’s announcement of a pause, but then reversed direction as the downbeat nature of Powell’s post-meeting remarks sank in. (Where have we seen this movie before?)

The main U.S. stock market indices closed lower Wednesday in choppy trading, as follows:

• DJIA: -0.22%
• S&P 500: -0.94%
• NASDAQ: -1.53%
• Russell 2000: -0.90%

The benchmark 10-year U.S. Treasury yield was unchanged at 4.36%.

Powell noted that higher rates are weighing on business investment, but inflation hasn’t fallen far enough to give the Fed confidence to stop hiking rates altogether. He said consumer spending has been particularly robust.

So what comes next? As super-investor Warren Buffett famously said: “In the business world, the rearview mirror is always clearer than the windshield.”

The final FOMC meetings this year are scheduled for October 31-November 1, and December 12-13.

The Fed has doubled its forecast for U.S. gross domestic product (GDP) growth for 2023 to 2.1%. Accordingly, Powell hinted today that another rate hike might be necessary.

The probability of another rate hike has risen in large part because of the surge in crude oil prices. The current projection on Wall Street is that the Fed will implement one last “insurance” hike either in November or December, and then start cutting rates in mid-2024 (see chart).

Sources: CME Group, Mind Over Markets

Rising interest rates played a crucial role in the selloff in both stocks and bonds last year. The Fed hiked interest rates by 25 basis points at its July 2023 meeting.

What really matters is when the Fed starts to cut in 2024. The timing and magnitude of those cuts remain uncertain, of course. But as the lagging, deleterious effects of elevated rates start to take their toll on the economy, the Fed will likely see fit to loosen monetary policy.

Rate cuts by the Fed would drive down the 10-year Treasury yield, in turn pushing down mortgage rates.

Lower rates in 2024 should enhance housing affordability due to cheaper mortgage costs, leading to the renewal of the beleaguered housing market. When housing prospers, so does the “wealth effect” among American consumers, which lifts the economy and stock market.

Keep your eye on the long term. History shows that the S&P 500 has gained an average of 6.5% in the six months following the first rate cut.

In the meantime, if you’re looking for a steady source of income amid these uncertain times, consider the advice of my colleague, Jim Pearce.

Jim Pearce is the chief investment strategist of our flagship publication, Personal Finance. Jim has unearthed a once “secret” income power play that’s giving everyday investors the opportunity to collect huge payouts, regardless of Fed policy or the ups and downs of the markets. To claim your share, click here.

John Persinos is the editorial director of Investing Daily.

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