---
title: Fed Rate Cut—Now What?
description: Learn how the Fed's recent rate cut could impact your investments, inflation, and recession risks. Get tips on aligning your portfolio for long-term success.
image: https://blog.emvisioncapital.com/hubfs/Fed%20Rate%20Cut%20-%20Whats%20This%20Mean%20for%20You.jpg
---

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# Fed Rate Cut—Now What?

* Published by James Artale *

The Fed has a dual mandate of promoting low inflation and full employment. In many ways, those two mandates are at odds with one another. The Fed seeks to balance low inflation and full employment by adjusting short-term interest rates.

## Why is The Fed Cutting Rates?

When the Fed raises [interest rates](https://blog.emvisioncapital.com/the-feds-interest-rate-hiking-cycle-and-shifting-inflation) (like they did in 2022), demand generally falls, typically leading to lower inflation and higher unemployment. Conversely, when they cut rates, demand generally rises, typically leading to higher inflation and lower unemployment. With the Fed’s long-term inflation target in sight and labor markets still relatively healthy, the Fed cut interest rates in hopes of avoiding a [recession](https://blog.emvisioncapital.com/avoiding-a-self-inflicted-recession) in the future. 

## How Will This Impact Investors?

In previous rate cycles, the Fed has tended to keep interest rates high for too long, causing a recession. This time, the Fed cut interest rates while the labor market is still relatively strong. While there are signs of slowing, that slowing is coming from a very healthy overall level. In our view, cutting interest rates while the labor market is still healthy increases the probability that we will avoid a recession.

More importantly, the start of a rate-cutting cycle is a sign that the period of unusually high inflation is likely over. From a big-picture perspective, this is very good news for both consumers and investors. 

## What Should Investors Do?

We suggest investors consider three actions:

1. Ensure their cash allocations are aligned with their long-term investment plans. Recently, the yield environment favored cash over bonds; we expect this to move towards bonds as short-term interest rates fall.
2. Revisit their asset allocations to ensure they are aligned with their long-term goals. While this economic environment is associated with a higher risk of recession, it has also been associated with healthy returns for stocks and bonds over three- to five-year time horizons.
3. Get invested and stay invested. With an increased risk of recession and upcoming elections, market volatility is likely. Investors who can stay disciplined could be rewarded with above-average investment returns. 

## Some Key Takeaways

1. The Federal Reserve cut the Fed Funds rate by 0.5% at their September 2024 meeting.
2. An interest rate cut signals the environment of unusually high inflation is likely over. This is a good thing for consumers and investors.
3. Investors should use this as an opportunity to align their investment portfolios with their long-term goals.

## **Questions?** 

Still not sure how the Fed rate cut impacts you? [Schedule a call today](https://emvisioncapital.com/contact-us/). We'd be happy to talk through it with you.

 

James Artale is a financial advisor located at EmVision Capital Advisors, 251 W. Garfield Rd. ​Suite 155 Aurora, OH 44202. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (330) 954-3770 or at [info@emvisioncapital.com](mailto:info@emvisioncapital.com).

*IMPORTANT INFORMATION*  
*This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax **advice. The information in this report has been drawn from sources believed to be reliable, but its accuracy is not **guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. **Financial advisors may seek more information by contacting AssetMark at 800-664-5345.*

*Investing involves risk, including the possible loss of principal. Past performance does not guarantee future **results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee **that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, **can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, **market conditions, and tax situation. It is not possible to invest directly in an index. Indexes are unmanaged, do not **incur management fees, costs, and expenses, and cannot be invested in directly. Index performance assumes the **reinvestment of dividends.*

*I**nvestments in equities, bonds, options, and other securities, whether held individually or through mutual funds and **exchange-traded funds, can decline significantly in response to adverse market conditions, company-specific events, **changes in exchange rates, and domestic, international, economic, and political developments.*

*AssetMark, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.*

*©2024 AssetMark, Inc. All rights reserved.*  
*7033028.1 | 09/2024 | EXP 09/2026*

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#### EmVisionblog

## welcome

[![Q1 Review: Record Highs, Diverging Sectors, and Bond Market Turbulence](https://blog.emvisioncapital.com/hubfs/Featured%20Image%20-Quarterly%20Market%20Review.jpg)

###### Q1 Review: Record Highs, Diverging Sectors, and Bond Market Turbulence

The first quarter of 2024 showed dynamic market movements. Amidst these fluctuations, global equities surged to new heights, led by a surprising economic resilience and robust corporate profits. In this market review, we delve into the intricacies...

![EmvisionCapital](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers-1.svg) 

](https://blog.emvisioncapital.com/q1-review-record-highs-diverging-sectors-and-bond-market-turbulence) [![Avoiding a Self-inflicted Recession](https://blog.emvisioncapital.com/hubfs/Avoiding%20a%20Self-inflicted%20Recession_1600x900.png)

###### Avoiding a Self-inflicted Recession

Many investors today are worried about a recession. For investors with longer time horizons, investing during a recession is almost unavoidable. The good thing is that for long-term investors staying invested matters more than a recession.

![EmvisionCapital](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers-1.svg) 

](https://blog.emvisioncapital.com/avoiding-a-self-inflicted-recession) [![The Fed’s Interest Rate Hiking Cycle and Shifting Inflation](https://blog.emvisioncapital.com/hubfs/Oct.%20Blog%20-%20On%20the%20Mark%20(1).png)

###### The Fed’s Interest Rate Hiking Cycle and Shifting Inflation

The world of economics reveals an inherent lack of precision. As the Federal Reserve navigates the intricate terrain of monetary policy, its pursuit of price stability and full employment encounters the elusive concept of "long and variable lags."...

![EmvisionCapital](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers-1.svg) 

](https://blog.emvisioncapital.com/the-feds-interest-rate-hiking-cycle-and-shifting-inflation)

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