On 7 November 2024, the Federal Open Market Committee—the monetary policy arm of the U.S. Federal Reserve—announced intentions to lower the target federal funds rate by 25 basis points (25 percentile points). The target range now stands at 4.50%–4.75%. This follows a previous 50 basis point cut made in mid-September 2024. Generally, the Fed has maintained a 2.00% equilibrium rate target to stabilize inflation and economic output—though this has not always been standard practice. From 1979–1987, for example, rates reached an all-time high of 17.78% as the Fed fought against a period of crushing, runaway inflation. Following the Great Financial Crisis in 2008, rates averaged 0.55% in the decade that followed to stimulate economic recovery. While rates are unlikely to return to post-2008 lows, absent any downturn in economic activity, loosening policy will likely have a positive impact on capital-intensive industries like the U.S. water sector.
In this Research Note:
- Fed cuts boost medium-term outlook for municipal water infrastructure buildout
- Rate cuts to influence utility investment decisions
- Lower rates to provide needed relief for industrial CAPEX projects
