The Fed is set to cut interest rates. Here are the risks

Group 1 - The Federal Reserve's Open Markets Committee is expected to cut the benchmark Fed Funds Rate by 0.25% during its upcoming meeting, with some analysts predicting a total reduction of 0.75% by the end of the year [1][2] - A potential split decision among Fed members is anticipated, with some favoring a 0.50% cut to align with political pressures, while the majority may support a 0.25% reduction [2] - The Fed's guidance on future rate cuts is crucial, with expectations of cumulative reductions totaling 100 basis points over the next 12 months, which will significantly influence macroeconomic conditions [5] Group 2 - Lower interest rates could lead to increased demand in the housing market, potentially driving up home prices despite lower mortgage rates [4] - The Fed's ongoing rate cuts may diminish the attractiveness of bank savings rates, with current cash returns of 4-5% at risk of disappearing [5] - Consumers may benefit from lower rates on mortgages, car loans, and credit cards, resulting in reduced monthly household expenses [7]